Rural Care at a Crossroads: Turning CMS TEAM into an Opportunity for Cross-Continuum Performance

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As the Centers for Medicare & Medicaid Services (CMS) launches performance year one of the Transforming Episode Accountability Model (TEAM), many hospital executives may view the initiative as a familiar remix of bundled payment and value-based purchasing programs. But for rural health systems, TEAM is not just a policy iteration: It is a real-time stress test of cross-continuum capability, community partnership maturity, financial resilience and leadership readiness.

Of TEAM's mandatory participants, 37 percent are rural hospitals, many already operating with thin or negative margins: A recent analysis found that 46 percent of rural hospitals have a negative operating margin, which could make it difficult to obtain the resources needed for TEAM success.

Without transformative capabilities, partnerships and funding sources to support cross-continuum care improvement, some of these hospitals' CMS reimbursements will likely continue to decline. And in this environment, even modest performance penalties can destabilize operations. For example, 84 percent of all TEAM rural hospitals experienced some level of payment penalty under the Hospital Readmissions Reduction Program (HRRP) in federal fiscal year 2025.

Meanwhile, success requires a level of integration that rural providers have historically been under-resourced to achieve. For instance, TEAM's high-cost, hospital-anchored surgical episodes expose long-standing structural challenges for rural providers including:

• Constrained workforce capacity and insufficient capabilities: TEAM focuses on complex surgical episodes that require highly skilled surgeons, nurses and auxiliary staff.
• Limited post-acute networks: By forming new regional collaboratives with physician groups and post-acute providers, hospitals can optimize shared resources and develop coordinated care pathways to reduce fragmentation. However, many rural providers have few options from which to choose.
• Gaps in digital health capabilities: Hospitals must prioritize technologies that help enable virtual consults, support post-surgical follow-up visits and expand access to specialty care, behavioral health resources and chronic disease management. However, many rural hospitals face significant obstacles in this area.
• Fragmented data: Many healthcare organizations, including rural hospitals, may lack the data integration systems, business analytics and quality improvement resources needed to manage program requirements and gain benchmarked insights to drive success.
• Insufficient capital to absorb downside risk: TEAM introduces both upside and downside risk. Again, rural hospitals may lack the financial cushion to absorb losses over the life of the program. Thus, organizational strategies must help contain unnecessary costs such as supply chain waste and workforce premium pay practices. They must also identify avenues for funding support, such as the Rural Heath Transformation (RHT) Program.

For rural systems, avoiding these pitfalls means trading episodic, facility-centric metrics for a data-driven, cross-continuum capability. By shifting TEAM compliance from a governance framework to a lever that helps forge regional partnerships, standardized handoffs and shared accountability for cost, quality and patient experience, rural health systems can ensure greater success.

Rural Workforce Resilience Through Scalable, Evidence-Based Models

Approximately 66 percent of the health professional shortage areas are in rural communities. This is why rural facilities typically turn to agency and temporary staffing services at double or even triple the rate of other providers. A recent analysis by Premier found that rural hospitals use agency staff at a higher rate than their non-rural counterparts. The analysis also found that in the second quarter of 2025, agency expense accounted for 4.6 percent of these facilities' total labor expense (compared with 3.2 percent for non-rural hospitals).

TEAM's complexity amplifies that gap, with a focus on surgical episodes that require highly skilled surgeons, nurses and auxiliary staff - all of which many rural facilities lack. Add lower surgical volumes compared to urban TEAM peers, and it's easy to see how performance can suffer. Overcoming this deficit requires a structured, data-driven approach to internal talent upskilling, contingency staffing and external partnerships that deliver high-skill care while protecting budgets.

Source: Premier Advisory Services using data from OperationsAdvisor®. All values reflect the median.

Source: Premier Advisory Services using data from OperationsAdvisor®. All values reflect the median.

Premier's experience with rural health systems shows that the organizations best positioned for success are redesigning workforce strategy at the enterprise level. These systems are shifting from reactive staffing models to an integrated workforce approach that balances employed labor, internal float pools and contingent resources. Using advanced analytics, they identify turnover hot spots and premium-pay drivers, benchmark labor cost per case and per episode, and model staffing changes before implementation to avoid downstream access or quality issues. This approach can improve flexibility, reduce premium labor spend and stabilize clinical operations in an environment of persistent scarcity.

At the same time, leading rural systems are extending clinical capacity without expanding fixed costs by prioritizing regional collaboration. Virtual and shared workforce models - particularly in specialties such as behavioral health, pharmacy and care coordination - allow rural hospitals to access high-skill expertise while remaining financially disciplined. These models, paired with data-driven deployment and benchmarking, enable executives to align staffing investments with TEAM objectives rather than volume alone. This, in turn, allows them to deliver high-skill care while protecting budgets.

Creation of Regional Post-Acute Networks Informed by Evidence and Performance Data

TEAM raises the bar by demanding true episode accountability. Cross-continuum success hinges on robust post-acute networks and navigation across primary care, home health, rehab and skilled nursing. For instance, when options are limited, particularly for post-acute care, rural providers often find themselves sending patients requiring skilled nursing (SNF) care to a "swing-bed," which has a higher reimbursement structure than a standard SNF. This increases episode spend and compromises performance in TEAM.

To overcome the deficit, post-acute partnerships should shift from transactional referrals to coordinated, regionally aligned care pathways. Rural leaders should pursue regional collaboratives with physician groups and post-acute partners to reduce fragmentation, optimize resource use and trim costly transitions. This includes leveraging data to map gaps, forecast episode costs and align post-acute care pathways - especially where swing-beds and limited SNF options increase costs.

Leading organizations also use integrated analytics to track readmissions, length of stay, functional outcomes and avoidable utilization by post-acute setting, even when volumes are small. This allows executives to concentrate volume with the highest-performing partners, redesign pathways when performance lags, and justify investments in alternatives such as hospital-at-home, remote monitoring or enhanced home health support.

Finally, care pathway innovation is usually preferable to capacity expansion. Rather than building or acquiring post-acute assets (which is often financially unrealistic), successful rural systems extend capacity through nurse navigators, care coordinators and virtual specialty support to help patients complete follow-up care and avoid costly complications. When paired with state and federal funding opportunities, including rural transformation initiatives, these approaches allow rural hospitals to turn post-acute scarcity into a more sustainable continuum of care.

Digital Health as a Force Multiplier, With Strong Governance

For rural health systems, digital health and AI should rapidly move beyond experimentation to become essential tools for extending care in the face of persistent workforce shortages, geographic barriers and financial pressure. Premier's experience with rural providers shows that the highest-impact digital strategies are those designed to expand access and clinical capacity, not add complexity. Digital tools such as AI-enabled triage; virtual consults, post-surgical follow-ups and specialty support, and remote clinical oversight allow scarce expertise to be deployed across multiple settings, giving rural hospitals a scalable route to deliver timely, high-quality care without increasing fixed labor costs.

Leading systems are also using digital health technologies to strengthen the "last mile" of care delivery, where breakdowns in follow-up, coordination and documentation often drive avoidable utilization and poor outcomes. Workflow automation, predictive analytics and real-time visibility across the continuum enable teams to identify at-risk patients, prioritize interventions and ensure care plans are executed, particularly in post-acute and home-based settings where rural resources are limited. These capabilities directly support performance under TEAM but also across other payers such as Medicare Advantage and Medicaid.

When moving toward adoption, providers need a disciplined, enterprise-level approach governed by clear risk controls, with an eye toward solutions known to deliver patient-centered impact, cost-effectiveness and regulatory compliance. Equally important, selected tools should integrate disparate data sources, enable cross-continuum insight and guide evidence-based decisions at the regional level.

Data Maturity as the Engine of Continuous Improvement

For rural health systems participating in TEAM, data, benchmarking and analytics are core to clinical performance, financial sustainability and durable improvement. Premier's experience shows that the most successful organizations start by consolidating fragmented clinical, financial and operational data into a single, enterprise view of episode performance. This allows leaders to understand true drivers of cost, quality and variation across the full surgical episode. Without this integrated visibility, rural hospitals risk managing TEAM retrospectively rather than proactively, leaving both performance improvement and margin protection to chance.

Robust benchmarking is also a critical differentiator under TEAM's regionally competitive structure. Rural facilities cannot rely solely on internal historical performance; rather, successful organizations will understand how their utilization, complication rates, post-acute spend and readmissions compare to regional and national peers. Access to normalized, risk-adjusted benchmarks enables executives to quantify opportunity, prioritize interventions and set realistic improvement targets. Predictive analytics further strengthen this approach by modeling the financial and clinical impact of pathway changes before changes are implemented.

To hardwire the data, high-performing rural systems embed executive dashboards and physician scorecards directly into management and team workflows, linking outcomes to accountability. By aligning analytics with clinical governance, physician engagement and value-based incentives, rural hospitals can move from reactive compliance to strategic control. The result is a more resilient organization using data not just to survive TEAM but to build lasting capability for future risk-based models.

Financial Resilience Through Disciplined Funding and Risk Management

For rural health systems operating in a margin-compressed environment, managing downside risk in TEAM requires a shift from volume-driven decision-making to episode management. Premier consistently advises rural providers to begin with clear financial and clinical guardrails at the service-line level. That means understanding true episode costs (including implant pricing, length of stay, post-acute utilization and readmissions) and setting explicit performance thresholds tied to TEAM benchmarks. With this visibility, leaders can prioritize high-impact levers such as standardizing clinical pathways, reducing unwarranted variation and aligning physician practice patterns with evidence-based care, all while protecting access in resource-constrained communities.

Rural providers should also pursue risk-mitigation strategies that limit exposure without requiring full downside risk maturity. For many rural facilities, this includes concentrating episodes among engaged surgeons, using gainsharing or co-management structures to align incentives and guiding patients toward the most reliable post-acute settings available - often home health or virtual recovery when institutional options are limited. Predictive analytics play a critical role here, enabling teams to identify high-risk patients and deploy targeted interventions to help prevent costly complications and avoidable utilization.

Lastly, sustainable downside protection comes from operational discipline and partnership, not cost-cutting alone. Leading rural systems leverage group purchasing, contract analytics and supplier alignment to manage implant and supply costs while preserving quality. They also use shared analytics platforms and collaboratives to benchmark performance, learn from peers and continuously refine.

Preparing for the Future

In TEAM, managing downside risk is about building repeatable capabilities - data-driven decision-making, aligned incentives and coordinated care - that strengthen financial resilience today while preparing the organization for broader value-based risk tomorrow.

By acting decisively now, leveraging available funding and forging new alliances, rural providers can transform familiar challenges into opportunities, safeguard their financial stability and ensure their communities continue to receive the high-quality care they deserve.

Premier's strategic collaboratives connect providers, suppliers and other experts to tackle common challenges, share best practices and test innovative solutions. Learn how they can help rural hospitals and health systems on the journey to better, smarter, faster care.