What if we’re using the wrong business model for rural health?
We are, plus, how it applies to the Rural Health Transformation Program (RHTP)
If you’ve read my work before, you know my perspective on health care is that prevailing business models are a poor fit for creating health. But today, I’m asking the title question specifically in the context of rural health care models.
In my last post, I dove into the financial and public health aspects of the RHTP, and asked you what I was missing in the analysis. I’m so grateful many of you replied, and one conversation in particular left me with a series of thoughts I think you’ll benefit from as well.
For context, the discussion was with one of my old colleagues from Advocate Health, Will Behrmann. He’s far more experienced with rural health care than I am and has extensive expertise in ambulatory care development (a.k.a. planning and launching outpatient practices for health systems).
As we spoke, we discussed how locations for urban health care practices, such as primary care clinics, are often planned based on bus routes. If transportation to the practice is within an existing traffic flow, more people will have greater access to it. But why, he asked, are we trying to use an urban business model in a rural area? He went on to note that we assume health care in a rural environment is the same problem to solve as it is in an urban environment, and it’s not.
He rightly noted that rural clinics are often located next to a Walmart or to the county high school, within an existing traffic pattern. But that’s not equivalent to a city’s bus route because the population density is so much lower. Why, then, would we try to replicate the business model that “works” in an urban environment in a rural one? Why don’t we leverage the Dutch model and have a community nurse who goes door-to-door throughout a rural community?
Also a student of Clayton Christensen’s, Will knew business model theory had a lot to offer in response to his question. And the more I thought about it after our conversation, the clearer it became that applying business models to the RHTP problem was the right approach. Let’s dive into why that’s the case.
Incumbents and startups look at business models from opposing perspectives
There are many reasons incumbents won’t adopt the Dutch model. First, physical doctors’ offices are a better model for the business owner (i.e., the health system, the individual practitioner, etc.) than a model that goes from house to house, which is better for the patient. That’s because it’s more convenient and traditionally more cost-effective for the business to have everyone come to it.
Second, and related to the first point, incumbent health care business models are supply-driven rather than demand-driven. They are organized in a way that allows them to optimize around their most important and costly resources: physicians and brick-and-mortar buildings.
But startups often organize in the opposite way. They enter the market with a demand-driven model, focusing first on the value proposition they offer customers and then organizing their business model around how to secure sufficient funding to reliably deliver on that value proposition. See the image below for a visualization of this dichotomy.
Source: A 2025 presentation I gave on health care business models
Third, because business models harden over time and are more challenging to alter the longer they exist, incumbents are highly unlikely to switch to the community-based worker business model that Will referenced. (For more on effective strategies for business model transformation, see here.) But startups are a different story, and we’re starting to see exciting innovations tackle the very problem Will and I were discussing.
One innovator worth highlighting is Nest Health, which I recently learned about from the Institute’s annual call for health care innovations. Nest describes itself as “whole family health care, at home.” It focuses on serving families on Medicaid with a model that is easy to access and built for the realities of raising children while managing work, housing, transportation, and the stress of daily life. Nest providers care for the whole family, not just children or adults, and they cover medical, behavioral, and social care all at home. Importantly, it’s available at no cost to families that are covered by participating health plans. A number of things excite me about Nest’s model, but key among them is that they address social care. As I mentioned in the last piece, without an emphasis on the drivers of health that account for up to 80% of health outcomes, rural health improvement is out of reach.
Models like Nest are highlighting that a different approach to health care, generally, and rural health care, specifically, is possible. But unless the RHTP funds go toward systemic changes like new business models—not just new technology—“transformation” will remain out of reach.
Thank you, Will, for reminding me that one of my favorite transformation tools (the business model) is a key lever for improving rural health. And if anyone working on the RHTP is reading this, I hope it can serve as support for why technology alone won’t fix the rural health problem. Instead, changing how we engage with rural health populations and the business models we use to do so will.