Money and Medicine: The Business of Health Care in Rural Virginia

By Polli Noskova

Doctors in Lexington and Rockbridge County increasingly face a tough choice: stay in a private practice, or join a larger health care provider like Carilion or Augusta Health.

Dr. Rob Marsh, who has offices in Augusta and Rockbridge counties, left the University of Virginia Health System for private practice because he didn’t like being part of a big system due to the restrictions on his time and patient billing.

“It was to run my own practice my own way,” he said.

But Marsh is unusual. Most doctors are going in the opposite direction, joining large health care providers like Carilion and Augusta Health. Carilion, a Roanoke-based non-profit, made its move into Lexington’s medical market in 2005 and was followed by Augusta Health, a privately owned nonprofit health care network, in 2009.

In Lexington and Rockbridge County, only a few private practices remain.  

Local physicians are struggling to remain independent as the field of health care grows increasingly complex with mandates to use electronic health record systems, requirements to meet quality benchmarks, and the necessity of negotiating with insurance companies.

Large health care providers are better equipped to handle such changes, and some doctors prefer it that way. But others are holding out because they want to keep their independence.  

“The longer you’re in private practice, the more nimble you get,” Marsh said.

Large health care systems have helped smaller practices manage an onslaught of changes in the health care field. Legislation like the 2010 Affordable Care Act increased requirements that doctors have to meet, such as using an electronic health record system. This software costs tens of thousands of dollars and can be difficult to operate for small health care providers.

Marsh is using his third electronic record system in about five years. He’s had to hire a medical “scribe” to help manage his data. He also moved his main office from Middlebrook to Raphine to take advantage of a stronger Internet connection that the software needs.

“You don’t know how difficult that is,” he said, referring to the software. “That is probably my greatest frustration.”

Under the Affordable Care Act, the government offered financial incentives to rural practices for adopting the software. Marsh said the $40,000 check he received only covered part of the $65,000 expense.

“I’m just now digging myself out of the hole,” he said.

Doctors are also required under the Medicare Access and CHIP Reauthorization Act, a Medicare reform law, to meet certain quality benchmarks when it comes to patient care.

As of January of this year, health care providers are scored based on four performance categories: quality, resource use, clinical practice improvement activities, and their use of the electronic health record technology. They can then receive a Medicare payment bonus, a penalty, or no payment adjustment.

The Rockbridge area has a high number of people who receive Medicare. In Lexington, 14 percent of residents receive Medicare, compared to 24 percent of the county. Statewide, 15 percent of residents receive Medicare. In Marsh’s practice, about 50 percent of his business involves the federal insurer.

The quality standards prompt doctors to make sure people with chronic conditions get the secondary care they need, such as confirming that diabetics get regular eye exams.

“When I’m in the room with a patient, I don’t want to be on the computer,” Marsh said.

But he has to be. He used to take care of his patient charts on the 20-minute drive to the hospital, using a Dictaphone. He’s had to hire extra employees to manage the electronic record system, raising his overhead costs without improvement to the bottom line.

“Quite frankly, I haven’t seen it improve patient care,” Marsh said.

Because so many of his patients are elderly, Marsh gets few requests from patients for online access to their records—a selling point of the software.

For Emily Long, a nurse practitioner at Rockbridge Internists who has worked at three local private practices, data entry is party of her day-to-day job.

She said the electronic health records are cumbersome but better than the paper alternative.

Long said systems vary from practice to practice and requirements vary from insurer to insurer. And that makes it difficult to get everything filed correctly all of the time. A missed deadline can result in penalties for practices.

“It’s a little bit of a guessing game,” she said.

Emily Long, nurse practitioner at Rockbridge Internists, enters patient data in an electronic health system.

Emily Long, nurse practitioner at Rockbridge Internists, enters patient data in an electronic health system.

Doctors also must work with insurers to determine how much they will be reimbursed for each of the services they provide to patients. Physicians can ask insurance companies for larger reimbursements, but doctors in private practice don’t have the same negotiating power as large health care companies.

“You take what they give you,” Marsh said.

He recently joined Privia Quality Network, an organization of independent physicians focused on improving quality and efficiency in practices. Marsh said the company has helped him with his billing and also in negotiating with insurers.

“I had to do that to survive,” he said.

Through Privia, Marsh says he can get health insurance benefits for his employees, which has gotten increasingly expensive over the past few years and made it harder for doctors to remain in private practice.


Stonewall Jackson in Lexington may owe its survival to Carilion, which bought the hospital in 2005. For a number of years the hospital had been losing some money or close to it. By joining Carilion, with its network of seven hospitals and 12,000 employees, Stonewall Jackson can afford to weather occasional losses. 

Because Carilion is a non-profit, all of the money the company makes goes back into the system, paying for employee wages and benefits, hospital equipment and new buildings. Last year Carilion spent $2 million on new hospital equipment in Lexington.

“You have to make money to survive. If you don’t, when the latest and greatest comes out, if you can’t take advantage of that, then the patients are going to go somewhere that can,” said Charles Carr, chief executive officer of Carilion Stonewall Jackson Hospital.

In 2015, the Rockbridge Area Community Health Needs Assessment said parts of the area are medically underserved for a variety of reasons, including a shortage of doctors. 

As large health care systems, Augusta Health and Carilion can recruit doctors to rural areas like this one, their executives say.

But that doesn’t mean it’s easy. “It’s getting very, very difficult to recruit family physicians in a small community, or anywhere, not just in small communities,” said Carr.

Marsh said he’s seen little proof of success.

“You’re getting all these gray-bearded doctors retiring, but you’re not replacing them. I think that’s a real concern,” he said.

Most of Carilion’s doctors in Lexington are rotated through from Roanoke, and Augusta Health recently experienced the closure of a family practice in Churchville because a physician left, and it was unable to fill the position for almost a year.

Angela Frazier, a front office manager at Augusta Health, said the office is slated to re-open in August. But she said trouble with retaining physicians is not unusual for anyone in health care right now.  

“There’s usually a high demand for physicians in primary care,” she said.

In Rockbridge County alone there are 893 people to every primary care physician. The shortage is created by a combination of aging doctors, crushing medical school debt and the cost of operating a private practice.

For some doctors, the choice to join big health care providers was inevitable.

Doctors say the federal government, through insurance programs like Medicare and Medicaid, prefers to deal with health care systems instead of individual providers. The insurers are able to reimburse a large company for an entire episode of care, or all of the medical care involved in treating a single issue, rather than reimbursing each individual doctor involved. For example, when someone breaks a leg, a company like Carilion can be reimbursed in one payment instead of dealing with each orthopedist and physical therapist that the patient sees.

Increasingly, private insurers like Anthem are also heading in this direction, preferring that their patients go to a large health care system instead of several individual providers. This makes it difficult for small, independent practices to survive.

Augusta Health and Carilion have the organizational infrastructure to handle billing and record-keeping, freeing up doctors to concentrate on practicing medicine, said Karen Clark, president of the Augusta Medical Group, which is part of Augusta Health.

More services

Since moving to the area, Carilion has participated in, and led, the Community Health Needs Assessments as part of its outreach program. In June 2016, Carilion opened VelocityCare, an urgent care center in Lexington, to address needs identified in the studies.

Augusta Health has also brought specialist care to Lexington. The specialists, including rheumatology and endocrinology, rotate through Dr. Walter Kerschl’s primary care office. Augusta Health also recently bought the Cool Spring Organic Market building on Greenhouse Road for a multi-specialty and diagnostic clinic.

The new clinic will have up to three specialists practicing every day, including gastroenterology, general surgery and oncology. Clark said this should be convenient for patients who, for example, may have to see an endocrinologist and a cardiologist in the same day and otherwise would not be able to.

Carilion has also increased the specialist offerings locally, including bringing more orthopedic and surgery specialists to the area. Stonewall Jackson CEO Carr said Carilion is considering whether to add two gynecologist rotators to Lexington who will be able to see patients and preform surgeries.

Though Augusta and Carilion are competitors, doctors say the non-profits have good relationships and refer patients to each other regularly. But with Augusta’s increasing specialist options, Carilion has had to keep up to make sure locals don’t have to leave the community to get the medical care they need.

Marsh said the competition between the two health providers brought services to Lexington that probably wouldn’t be there if there was just one large provider in the area.

“I think competition is healthy,” he said. “I think it’s in good form.”



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