The acquisition and implementation of enterprise solutions is a daunting process for any healthcare provider. Critical access hospitals usually find the task even more nuanced given unique pressures, some of which include:

• Constrained budgets: Compared to other facilities, critical access hospitals typically have the smallest IT budget, as a percentage of overall hospital budget and in gross numbers. Budget constraints are also exacerbated by low volumes, rising number of uninsured, recession related unemployment, and a patient mix with a high Medicare/Medicaid presence typically found in rural geographies.
• Increased competition from larger IDNs: Competition can come in the form of IDNs opening/acquiring rural clinics, as well as from Federally Qualified Health Centers (FQHC) which often have greater access to grant funding and better medical liability coverage. This makes future growth plans hazy given that critical access hospitals can be challenged in projecting consistent market share given the changing competitive landscape.
• IT talent retention: Attracting and retaining talented IT personnel is one of the prime concerns for critical access facilities. Some have turned to IT outsourcing, but this also carries its own risks and costs.

In effect, critical access hospitals are feeling fiscal pressures from all sides – in changes to federal reimbursements, a patient population hit hard by recession, rising labor and structural costs, as well as from legislation which requires a higher level of IT adoption within an arbitrary timeline.

In our next post, we’ll look at which Health IT trends working in favor of small hospitals

Chris O’Neal is Managing Partner at KATALUS Advisors. KATALUS Advisors is a strategic consulting firm focused on the healthcare vertical. We serve healthcare technology vendors, hospitals, and private equity groups in North America, Europe, and the Middle East. Our services span growth strategies in new and existing markets, M&A due diligence, market analysis, and advisory services. www.KATALUSadvisors.com