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Rural Health Care Pilot Program Evaluation -Staff Report

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Released: August 13, 2012

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WIRELINE COMPETITION BUREAU

EVALUATION OF RURAL HEALTH CARE PILOT PROGRAM

STAFF REPORT

WC DOCKET NO. 02-60

AUGUST 13, 2012


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EXECUTIVE SUMMARY

Americans living in rural areas face a shortage of primary care physicians and specialists, and
often must travel large distances to obtain medical care. The increasing cost of providing health care and
the demands of an aging population also put pressures on rural health care providers, many of which
struggle to keep their doors open.
The Federal Communications Commission (Commission or FCC) has implemented the statutory
mandate for universal service by, among other things, creating the Rural Health Care (RHC) program to
improve access to communications services for eligible health care providers. In recent years, broadband
has become increasingly vital to the effective delivery of health care, and it can be uniquely
transformative in rural areas, where distance poses a substantial challenge. In recognition of this, the
Commission in 2006 launched the Rural Health Care Pilot Program (Pilot Program), which awarded 69
projects one-time funding for a defined period of time (a total of $418 million) to cover up to 85 percent
of the cost of construction and deployment of broadband networks that connect participating health care
providers in rural and urban areas. The Pilot Program currently supports 50 active projects in 38 states
(the “Pilot projects”) and the territories of Guam, American Samoa and the Northern Mariana Islands.
Many of the Pilot broadband networks have been established and are now delivering the benefits of
telemedicine and other telehealth applications to their patients.
In creating the Pilot Program, the Commission sought to harness the potential of broadband
health care provider networks to improve the quality and reduce the cost of health care in rural areas,
while drawing on that experience to inform the redesign of its permanent RHC program. A key
component of any pilot program is the opportunity to evaluate what has been learned and how those
experiences can inform future work – in this case, the Commission’s ongoing oversight and management
of its universal service programs. This Staff Report provides an evaluation of the successes and
challenges of the Pilot projects to date. The Report describes the projects, their broadband networks, and
the financial and telehealth benefits generated by their broadband connectivity. The Report presents data
through January 31, 2012, except where otherwise noted.
This Report also summarizes key observations from the Pilot Program, to assist the Commission
as it considers potential changes to the permanent rural health care program. In the 2010 Notice of
Proposed Rulemaking
(NPRM), the Commission proposed a number of changes to improve access to
broadband services and broadband infrastructure for health care providers, building on the
recommendations of the 2010 National Broadband Plan.
As is clear from this Report, the Pilot Program provides fertile ground to help the Commission
determine how best to reform the existing rural health care program, which provides ongoing support for
telecommunications and Internet access services. The following are key facts, benefits, and lessons of the
Pilot Program to date:
Key Facts About the Pilot Program:
·
As of January 2012, 2,107 health care providers were on target to receive $217 million in
universal service support through the Pilot Program (an average of about $100,000 per health
care provider over the award period).
·
Projects range in size from fewer than ten to over 150 health care provider sites; about a third
of the projects each have over 50 health care provider sites receiving support through the
Pilot Program.
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·
The five largest projects are statewide networks located in California, Colorado, Oregon,
South Carolina, and West Virginia. So far, these networks are on target to receive funding to
connect over 800 health care providers.
·
Forty-four of 50 projects that receive Pilot Program support include urban health care
providers. Approximately 35 percent of all health care providers that had received funding
commitments in the Pilot Program as of January 2012 were classified as urban, or 733 of the
2,107 total.
·
Leaders of Pilot projects often come from large medical institutions and universities, which
frequently are located in urban areas. The urban health care providers often serve as hubs for
the network, and as such receive support for the equipment that enables the entire network to
operate.
·
Pilot project participants purchase higher bandwidth connections than do participants in the
Commission’s existing program, which defrays the cost of telecommunications and Internet
access services for health care providers in rural areas. Most Pilot Project participants
purchase 10 Mbps or faster connections, which are much faster than the connections that
typically are purchased in the permanent RHC Program, the vast majority of which are 3
Mbps or less.
·
The majority of Pilot projects choose to purchase broadband services from commercial
providers rather than construct and own their own broadband networks.
Key Benefits of the Pilot Program. Support through the Pilot Program has helped health care providers
obtain broadband capability to implement telemedicine and telehealth applications. Telemedicine and
telehealth applications improve the quality of health care delivered to patients in rural areas, generate
savings in the cost of providing health care, and reduce the time and expense associated with travel to
distant locations to receive or provide care. Although many Pilot projects are still assembling their
networks, the projects have already demonstrated how broadband health care networks can significantly
improve the quality and reduce the cost of providing health care in rural areas. For example:
·
The Palmetto State Providers Network, located in South Carolina, reports that it has
saved $18 million dollars in Medicaid costs over 18 months as a result of its tele-
psychiatry program. Psychiatric consults are now available 24/7. Previously, patients
would take up valuable health care provider time and resources by having to wait for
days to receive psychiatric consults.
·
In Pennsylvania, Geisinger Health System notes that its network provides tele-stroke
services for neurology patients within minutes as opposed to hours. Given that “time is
brain” for stroke victims, instant access to specialized care can be life-saving.
·
All of Geisinger’s Pilot project health care providers are members of a Health
Information Exchange that links 53 hospitals and 9,000 physicians, and they have
adopted, implemented, upgraded, or successfully demonstrated the use of certified
Electronic Health Record technology.
·
In South Dakota, the Heartland Unified Broadband Network (HUBNet) estimates that
hospitals in its network have saved $1.2 million in transfer expenses over a 30-month
period, following the implementation of electronic Intensive Care Unit (e-ICU) services.
HUBNet also has dropped the average number of days patients spend in ICU, thereby
reducing costs, and has reduced the number of patient transfers to other hospitals.
·
Pennsylvania Mountains Healthcare Alliance’s network has reduced the turnaround time
on X-ray readings from 20 to 7 minutes.
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·
Continuing medical education provides rural providers with increased learning
opportunities and reduces their sense of medical isolation. For example, rural sites
participating in the Iowa Rural Health Telecommunications Program report that the
network and the telemedicine services provided over it have enhanced physician
satisfaction and collegial support.
Key Lessons Learned from the Pilot Program. This report also summarizes key observations drawn
from successful Pilot Programs. These observations include:
·
Broadband health care networks improve the quality and reduce the cost of delivering
health care in rural areas
. Broadband makes possible the use of telemedicine to improve
health care delivery in rural areas. In addition to delivering needed medical care to
patients in remote locations, telemedicine lowers the cost of providing health care,
reduces travel time and expense for patients, providers and doctors, and brings needed
revenue to endangered rural clinics and hospitals. Broadband networks also facilitate
other important telehealth applications – such as the transmission of medical images,
exchange of electronic health records, remote consultations with specialists, and training
of rural medical personnel.
·
Consortium applications are more efficient. Consortium applications save time and
money for applicants and for the Universal Service Administrative Company (USAC),
which administers rural health care programs under the Commission’s direction.
Consortium applications allow health care providers to spread administrative, network
design, and other costs over a large number of entities. They also enable smaller health
care providers to take advantage of the expertise and resources of larger providers, and
they foster the formation of coordinated networks of health care providers.
·
Bulk buying plus competitive bidding is a powerful combination. Consortium purchasing
by a large number of geographically dispersed sites, coupled with competitive bidding,
can yield higher bandwidth, lower prices, and better service quality for the Pilot projects.
·
Urban sites are key members of rural health care provider networks. As the Western
New York Pilot project put it, without its urban partners it would be “building a road to
nowhere.” Broadband networks often bring to patients in rural areas the additional
medical expertise, creativity, technical know-how, and innovation available in large
urban medical centers. The leadership, technical and medical expertise, and
administrative resources provided by urban health care providers also have proved central
to the success of many Pilot projects.
·
Most health care providers do not have the technical expertise to manage broadband
networks and do not want to own such networks
. The majority of Pilot projects have
created successful broadband networks by purchasing broadband services from a third
party, rather than constructing and owning their own broadband facilities. Mechanisms
such as long-term leases, prepaid leases, and indefeasible rights of use of facilities for
specified period of time (IRUs) help many projects obtain the bandwidth and service
quality they needed.
·
Funding challenges remain for rural health care providers. Rural health care providers
operate on a thin margin, or in the red, and universal service support helps many to access
the benefits of broadband.
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TABLE OF CONTENTS

Heading
Paragraph #
I.
INTRODUCTION ........................................................................................................................... 1
II.
BACKGROUND ............................................................................................................................. 8
A. The Creation of the Rural Health Care Support Mechanism..................................................... 8
B. The Creation of the Pilot Program........................................................................................... 12
C. Application Process ................................................................................................................. 17
D. Post-Selection Developments.................................................................................................. 19
III.
DESCRIPTION OF THE PILOT PROJECTS .............................................................................. 23
A. Size of Projects and Awards.................................................................................................... 26
B. Geographic Coverage of Projects............................................................................................ 34
C. Rural/Urban Composition of Projects ..................................................................................... 36
D. Types of Health Care Providers Participating in Projects ....................................................... 39
E. Enterprise-Grade Services ....................................................................................................... 44
F. Self-Construction versus Services Purchased from Third Parties ........................................... 47
G. Bandwidth of Services Purchased ........................................................................................... 52
H. Reduced Cost of High Bandwidth Connections ...................................................................... 57
IV.
IMPROVEMENTS IN QUALITY AND COST OF HEALTH CARE......................................... 63
A. Telehealth/Telemedicine Applications Enabled by the Pilot Program.................................... 64
B. Improved Quality and Efficiency of Health Care Delivery..................................................... 67
C. Cost Savings from Telemedicine/Telehealth Applications ..................................................... 72
1. Reduced Transfer and Travel Costs .................................................................................. 72
2. Reduced Operating Costs and Increased Revenue Opportunities..................................... 73
V.
KEY OBSERVATIONS ................................................................................................................ 76
A. Use of Consortia ...................................................................................................................... 77
B. Inclusion of Urban Providers................................................................................................... 88
C. Ownership of Broadband Facilities Versus Purchased Services ............................................. 91
D. Funding of Network Design Studies ....................................................................................... 94
E. Administrative Expenses ......................................................................................................... 95
F. Requirement for Sustainability Plans ...................................................................................... 96
G. Multi-Year Commitments (Waiver of Annual Filing Requirement)..................................... 100
H. Flat-Rate Discount................................................................................................................. 101
I.
Discount Percentage .............................................................................................................. 104
VI.
CONCLUSION............................................................................................................................ 108
Appendix A: Status of Pilot Projects by State
Appendix B: Pilot Project Descriptions and Goals
Appendix C: Pilot Project Composition by HCP Type
Appendix D: List of Winning Vendors
Appendix E: List of Ex Parte Filings and Citations

I.

INTRODUCTION

1. The Wireline Competition Bureau (Bureau) staff has prepared this Staff Report (Report) to
assist the Federal Communications Commission in considering reforms to the Rural Health Care (RHC)
support mechanism and in developing sound evaluation plans for any new programs. The Report both
describes and extracts lessons from the Commission’s Rural Health Care Pilot Program (Pilot Program),
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which provides universal service support to extend broadband networks for health care providers
(HCPs).1 As discussed more fully below, the Report provides concrete data regarding the efficacy of
broadband networks in delivering health care to rural America. The Report also provides extensive
information that will assist the Commission in addressing the recommendations of the U.S. Government
Accountability Office (GAO) in its November 2010 report on the Rural Health Care program.2 The
Report presents data through January 31, 2012, except where otherwise noted.
2. The Report draws on the experiences of the Pilot projects selected in 2007: where they are
now, what has worked, what has been challenging, what their broadband networks look like, and what
telehealth benefits and cost savings they have realized. In order to prepare this Report, the staff spoke
with a number of Pilot projects located throughout the country, which are of various sizes and at various
stages of implementation. The staff also reviewed quarterly reports submitted by the Pilot projects to the
Commission and data submitted by the Pilot projects at various stages of the funding process to the
Universal Service Administrative Company (USAC), the entity that performs the day-to-day
administration of the program under Commission oversight. The Report also reports on USAC’s
experience with the Pilot Program. USAC has provided the Commission with its own observations
about the Pilot Program, as well as summaries of site visits to Pilot projects, data, and an informal
assessment of the needs of rural health care providers. Because USAC is the front-line interface with the
Pilot projects, USAC’s insights have been particularly valuable in the preparation of this Report.3
3. Many of the Pilot projects are still in the process of securing final funding commitments and
implementing their networks, and so this Report can only provide a snapshot of the status of the various
projects at a specific point in time (generally as of January 31, 2012, in this Report).4 Nevertheless,
many Pilot projects have already demonstrated the enormous benefits that broadband networks can bring
for patients in rural areas. They have employed sophisticated telemedicine and other health IT
applications over their networks, and many have begun to realize cost savings for the health care services
they provide to rural Americans.5
4. These benefits realized by the Pilot projects thus far fulfill one of the Commission’s two
goals in creating the Pilot Program: “to bring the benefits of innovative telehealth and, in particular,


1 See Rural Health Care Support Mechanism, WC Docket No. 02-60, Order, 21 FCC Rcd 11111 (2006) (2006 Pilot
Program Order
); Rural Health Care Support Mechanism, WC Docket No. 02-60, Report and Order, 22 FCC Rcd
20360 (2007) (2007 Pilot Program Selection Order). The Commission opened participation in the Pilot Program to
all eligible public and non-profit health care providers to promote the “goal of stimulating the deployment of
innovative telehealth networks that will link rural health care facilities to urban health care facilities and provide
telemedicine services to rural communities.” 2007 Pilot Program Selection Order, 22 FCC Rcd at 20421, para. 120.
2 U.S. Gov’t Accountability Office, FCC’s Performance Management Weaknesses Could Jeopardize Proposed
Reforms of the Rural Health Care Program GAO 11-27 (Nov. 2010) (GAO Report), available at
http://www.gao.gov/products/GAO-11-27 (last visited Mar. 1, 2012). The GAO Report recommended, among other
things, that the Commission assess the communications needs of rural health care providers; consult with USAC and
other agencies and associations representing rural health care providers; develop effective goals, performance
measures, and performance evaluation plans for current and future rural health care programs; and clearly articulate
rules governing any new programs. Id. at 56-57.
3 Appendix E lists the ex parte submissions that were used in the preparation of this Report, including submissions
from the Pilot projects, USAC, and other interested parties.
4 Most of the aggregate data used in this Report is provided as of January 31, 2012. The final deadline for
submission of funding commitment requests by Pilot projects was June 30, 2012. USAC is still in the process of
reviewing those requests, and will be in a position to update the data once that process is concluded later this year.
5 See infra Section IV.
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telemedicine services to those areas of the country where the need for those benefits is most acute.”6
The other goal of the Commission was that the Pilot Program would “lay the foundation for a future
rulemaking that w[ould] explore permanent rules to enhance access to advanced services for public and
non-profit health care providers” and would provide “useful information as to the feasibility of revising
the Commission’s current RHC rules in a manner that best achieves the objectives set forth by
Congress.”7 With respect to this second goal, this Report provides analysis useful to the Commission as
it considers reforms to the rural health care support mechanism to harness the potential of broadband to
improve the quality and lower the cost of providing health care in rural areas across the country.8
5. In the years since the Commission outlined its goals for the Pilot Program, it has continued
to recognize that broadband can play an important role in the transformation of health care in the 21st
century, and that access to broadband is not fully realized today in all parts of the country. The
Commission said in its March 16, 2010 Joint Statement on Broadband that “ubiquitous and affordable
broadband can unlock vast new opportunities for Americans, in communities large and small, with
respect to . . . health care delivery.”9 Additionally, the National Broadband Plan, also released on March
16, 2010, emphasized the importance of ensuring “sufficient connectivity for health care delivery
locations.”10
6. During the same time period, developments in health information technology (Health IT),11
particularly in telehealth,12 telemedicine,13 and the exchange of electronic health records (EHRs),14 have


6 2006 Pilot Program Order, 21 FCC Rcd at 11111, para. 1.
7 Id. at 11112, para. 4.
8 Rural Health Care Support Mechanism, WC Docket No. 02-60, Notice of Proposed Rulemaking, 25 FCC Rcd
9371, 9373, para. 3 (2010) (2010 NPRM or NPRM).
9 Joint Statement on Broadband, GN Docket No. 10-66, Joint Statement on Broadband, 25 FCC Rcd 3420, para. 3
(rel. Mar. 16, 2010).
10 The National Broadband Plan recommended, among other things, that the Commission reform the RHC program
by replacing the existing Internet Access Fund with a Health Care Broadband Access Fund and establishing a Health
Care Broadband Infrastructure Fund to provide support for network deployment to health care delivery locations
where existing networks are insufficient. Federal Communications Commission, Connecting America: The National
Broadband Plan, at 200 (rel. Mar. 16, 2010) (National Broadband Plan).
11 As defined in the National Broadband Plan, Health IT includes “information-driven health practices and the
technologies that enable them” such as “billing and scheduling systems, e-care, EHRs, telehealth and mobile
health.” Id.
12 Telehealth is defined as the “electronic exchange of information-data, images and video-to aid in the practice of
medicine, advanced analytics” and non-clinical practices such as continuing medical education and nursing call
centers. It encompasses technologies that enable video consultation, remote monitoring and image transmission
(store-and-forward) over fixed or mobile networks. Id.
13 Although related to telehealth, telemedicine is usually more narrowly defined. The Centers for Medicare and
Medicaid Services (CMS) defines “telemedicine” as “two-way, real time interactive communication between the
patient, and the physician or practitioner at the distant site to improve a patient’s health.” Centers for Medicare &
Medicaid Services, http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Delivery-
Systems/Telemedicine.html (last visited Apr. 19, 2012). The American Telemedicine Association defines
“telemedicine” as “the use of medical information exchanged from one site to another via electronic
communications to improve patients' health status.” American Telemedicine Association,
http://www.americantelemed.org/i4a/pages/index.cfm?pageid=3333 (last visited June 5, 2012).
14 The National Broadband Plan defines an EHR as “a digital record of patient health information generated by one
or more encounters in any care delivery setting.” It includes “patient demographics, progress notes, diagnoses,
(continued . . .)
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increased rural health care providers’ need for robust broadband connections. Since the 2006 Pilot
Program Order
, rural health care providers have continued to use telemedicine to improve and reduce
the cost of health care for their patients. For people living in rural areas, travel time to locations where
specialists practice can be substantial, and the associated delay in obtaining treatment can have serious
consequences. There are shortages of physicians in many rural areas, and Pilot projects have used their
networks to meet the health care needs of their patients and accomplish other telehealth purposes.15 In
addition, there have been significant advances in the move to adoption and exchange of electronic health
records. Most notably, in the 2009 HITECH Act, Congress adopted an incentive payment system under
Medicare and Medicaid to encourage health care providers to convert to electronic health records and to
develop the capability of exchanging those records.16 Since that time, a number of health care providers
have been working towards the adoption and exchange of electronic health records.
7. Many Pilot projects have made substantial advances towards completion. About half of the
total Pilot funding had been committed as of January 2012, and USAC estimates that by the end of 2012,
total funding requested and processed will be approximately $368 million (a figure equal to 95 percent
of the 50 active projects’ cumulative total original awards). Furthermore, about a quarter of individual
health care provider sites will have spent their allotment of Pilot Program funds by June 30, 2013.17
Given the extent of the Commission’s experience to date with the Pilot Program, coupled with recent
developments in Health IT, the time is ripe to evaluate the Pilot Program so that the Commission may
draw on that experience in considering reforms to the RHC program in the pending rulemaking
proceeding.18 Accordingly, the Bureau staff has prepared this Report, which is divided into four parts:
(1) the creation and design of the Pilot Program; (2) the description of the Pilot projects and their
network characteristics; (3) the improved quality and reduced cost of health care realized by the projects
as a result of their broadband networks; and (4) key observations regarding the Pilot Program.

II.

BACKGROUND

A.

The Creation of the Rural Health Care Support Mechanism

8. As part of the Telecommunications Act of 1996 (1996 Act), Congress directed the
Commission to provide rural health care providers with “an affordable rate for the services necessary for
(. . . continued from previous page)


medications, vital signs, medical history, immunizations, laboratory data and radiology reports.” National
Broadband Plan
at 200.
15 See USAC Mar. 16 Site Visit Reports at 6, 14 (observing that Henry County Health Center, a rural health care
provider participating in the Iowa Rural Health Telecommunication Program, and rural health care providers in the
Avera Health network respectively use tele-radiology and tele-pharmacy to meet the health care needs of their
patients). See also NARMH Apr. 12 Ex Parte Letter at 1 (explaining that telemedicine allows patients to be cared
for in their communities even when a physician is not physically located at that site); ONC Jan. 17 Ex Parte Letter at
2 (the “shortage of physicians in rural areas means that there is even more need to leverage technology and use
telehealth to provide care to patients in rural areas”); Pilot Project Conference Call Mar. 13 Ex Parte Letter (PMHA
et al.) at 1 (noting that South Carolina faces challenges to similar to most rural states, including a paucity of
specialized services).
16 See Letter from Kathleen Sebelius, Secretary of Health and Human Services, to Julius Genachowski, Chairman,
FCC, WC Docket No. 02-60 (filed Sept. 7, 2010) at 1 (HHS Comments).
17 USAC Aug. 2 Data Letter at 2.
18 See 2010 NPRM; see also 2006 Pilot Program Order, 21 FCC Rcd at 11112, para. 4.
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the provision of telemedicine and instruction relating to such services.”19 Specifically, the 1996 Act
mandated that telecommunications carriers provide telecommunications services for health care purposes
to rural public or non-profit health care providers at rates that were “reasonably comparable” to rates in
urban areas.20 However, not all public or non-profit health care providers are eligible to participate.
Eligible health care providers, as defined in the 1996 Act, only include (1) post-secondary educational
institutions offering health care instruction, teaching hospitals, and medical schools; (2) community
health centers or health centers providing health care to migrants; (3) local health departments or
agencies; (4) community mental health centers; (5) not-for-profit hospitals; (6) rural health clinics; and
(7) consortia of health care providers consisting of one or more entities falling into the first six
categories.21
9. Consistent with Congress’s directive, the Commission established the rural health care
telecommunications program in 1997 to ensure that rural health care providers pay no more than their
urban counterparts for their telecommunications needs in the provision of health care services.22 The
telecommunications program ensures that eligible rural health care providers can obtain a rate for each
supported service that is no higher than the highest tariffed or publicly available commercial rate for a
similar service in the closest city in the state with a population of 50,000 or more people, taking distance
charges into account – in effect, providing a discount to the HCP in the amount of the “rural-urban
differential.”23
10. In 2003, the Commission created the rural health care Internet access program pursuant to
section 254(h)(2)(A) of the Act, which directs the Commission to establish competitively neutral rules to
enhance, to the extent technically feasible and economically reasonable, access to “advanced
telecommunications and information services” for public and non-profit health care providers.24 The
Internet access program provides a 25 percent discount off the cost of monthly Internet access for
eligible rural health care providers.25 Together the telecommunications and Internet access programs are
commonly referred to as the “Primary Program.”


19 Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (1996). The 1996 Act amended the
Communications Act of 1934 (Communications Act or Act); Joint Explanatory Statement of the Committee of
Conference, 104th Cong., 2d Sess. at 133 (1996); see also 47 U.S.C. § 254(b)(3), (h).
20 See 47 U.S.C. § 254(h)(1)(A) (directing that telecommunications carriers should provide “telecommunications
services” that are necessary for the provision of health care services to any “public or nonprofit” health care provider
that serves persons who reside in rural areas, at rates that are “reasonably comparable” to rates in urban areas).
21 47 U.S.C. § 254(h)(7)(B).
22 See, e.g., 47 U.S.C. § 254(h)(1)(A); Federal-State Joint Board on Universal Service, CC Docket No. 96-45,
Report and Order, 12 FCC Rcd 8776, 9093-9161, paras. 608-749 (1997) (Universal Service First Report and Order)
(subsequent history omitted); 47 C.F.R. Part 54, Subpart G.
23 Universal Service First Report and Order, 12 FCC Rcd at 9093, para. 608.
24 47 U.S.C. § 254(h)(2)(A).
25 47 C.F.R. § 54.621. See generally Rural Health Care Support Mechanism, WC Docket No. 02-60, Report and
Order, Order on Reconsideration, and Further Notice of Proposed Rulemaking, 18 FCC Rcd 24546 (2003) (2003
Order and Further Notice
). A 50 percent discount (rather than 25 percent) is available for Internet access services
for health care providers in states that are “entirely rural,” that is, states in which every county meets the
Commission’s definition of rural. Rural Health Care Support Mechanism, WC Docket No. 02-60, Second Report
and Order, Order on Reconsideration, and Further Notice of Proposed Rulemaking, 19 FCC Rcd 24613, 24631,
para. 38 (2004) (Second Report and Order and Further Notice).
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11. As of June 30, 2011, approximately $414 million had been disbursed through the Primary
Program.26 Annual disbursements have grown through the course of the Primary Program, from $3.375
million in 1998 (the first funding year), to $10 million in 2000, $25 million in 2003, $54 million in 2007,
and $81.5 million in 2010.27

B.

The Creation of the Pilot Program

12. In September 2006, the Commission established the Rural Health Care Pilot Program to
provide funding to support state or regional broadband networks designed to bring the benefits of
innovative telehealth and telemedicine services to those areas of the country where the need for those
benefits is most acute.28 The Pilot Program provides funding for up to 85 percent of the costs associated
with: (1) the construction of state or regional broadband networks, and the advanced
telecommunications and information services provided over those networks; (2) connecting to
nationwide backbone providers Internet2 or National LambdaRail (NLR); and (3) connecting to the
public Internet.29 Pilot projects can use RHC support to purchase services from third parties, or to
receive service by constructing and owning their own network facilities.30 Additionally, the Pilot
Program allows participants to use funding to purchase items that are not eligible for support under the
Primary Program, such as equipment (e.g. servers, routers, firewalls, switches, and other devices or
equipment necessary for the broadband connection), or to upgrade their existing equipment and increase
bandwidth.31
13. In creating the Pilot Program, the Commission noted that broadband was enabling health
care providers to vastly improve access to quality medical services in remote areas of the country, but
that health care providers lacked access to the broadband facilities needed to support the types of
advanced telehealth applications, such as telemedicine, that are so vital to bringing medical expertise and
the advantages of modern health care technology to rural areas of the country.32 The Commission stated
that even though it had taken a number of steps to spur deployment of the type of broadband facilities
that would support advanced medical technologies, the RHC support mechanism had to date not
adequately provided the type of support needed to encourage development of dedicated broadband


26 See Universal Service Monitoring Report, Dec. 2011, CC Docket No. 98-202, Table 2.21, available at
http://www.fcc.gov/wcb/stats (last visited May 7, 2012) (2011 Universal Service Monitoring Report).
27 See id.; Universal Service Administrative Company, 2011 Annual Report at 13, available at
http://www.usac.org/about/tools/publications/annual-reports/2011/index.html (last visited Apr. 17, 2012) (2011
USAC Annual Report).
28 2006 Pilot Program Order, 21 FCC Rcd at 11111, para. 1.
29 2007 Pilot Program Selection Order, 22 FCC Rcd at 20361, para. 2.
30 See 2006 Pilot Program Order, 21 FCC Rcd at 11111, para. 1, 11115-16, paras. 14-15. In the 2007 Pilot
Program Selection Order
, the Commission clarified that, to the extent a selected participant leases transmission
services in lieu of deploying its own broadband network, the costs for subscribing to such facilities and services are
eligible for program support. 2007 Pilot Program Selection Order, 22 FCC Rcd at 20397-98, para. 74. Throughout
this Report, we distinguish between services purchased by HCPs from third parties (which may include mechanisms
such as long-term leases, prepaid leases, and indefeasible rights of use of facilities for specified period of time
(IRUs)) from “self-construction” (i.e. network facilities constructed and owned by the HCPs).
31 2007 Pilot Program Selection Order, 22 FCC Rcd at 20397-98, para. 74. See also USAC Observations Letter at
6-7 (explaining that unlike Primary Program participants, Pilot Program participants could use RHC support to
purchase and upgrade their equipment if necessary).
32 2006 Pilot Program Order, 21 FCC Rcd at 11113, para. 8.
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networks among health care providers.33 The Pilot Program was intended to “provide the Commission
with a more complete and practical understanding of how to ensure the best use of the available RHC
support mechanism funds to support a broadband, nationwide health care network (expressly including
rural areas) so that the Commission can reform the overall RHC support mechanism.”34
14. Selection of Pilot Projects. Given the nature of the Pilot Program, the Commission
encouraged multiple health care providers in a state or region to join together to formulate and submit
proposals.35 Pilot Program applicants were instructed to present a strategy for aggregating the specific
needs of health care providers within a state or region, including providers that serve rural areas, and for
leveraging existing technology to adopt the most efficient and cost-effective means of connecting those
providers.36 While participation was opened to all eligible public and non-profit health care providers,
applicants were required to include in their proposed networks more than a de minimis number of health
care providers that serve rural areas.37 The 2006 Pilot Program Order also included 11 specific criteria
that applicants were instructed to address in their applications, including the proposed network’s goals
and objectives, previous experience in developing and managing telemedicine programs, and the extent
to which the network would be self-sustaining once established.38


33 Id. While the Primary Program provides rural health care providers with substantial telecommunications and
Internet discounts, in its 2006 Pilot Program Order, the Commission recognized that the program had yet to fully
achieve the benefits intended by the statute and the Commission. Although the Primary Program was capped at
$400 million, since the program’s inception in 1998 through 2006, the program generally had disbursed less than 10
percent of the cap each year. Id.
34 Id. at 11113, para. 9; see also 2007 Pilot Program Selection Order, 22 FCC Rcd at 20366-67, para. 15.
35 2006 Pilot Program Order, 21 FCC Rcd at 11111, para. 3.
36 Id. at 11116, para. 16.
37 Id. at 11111, 11114, paras. 3, 10. The Pilot Program was established under section 254(h)(2)(A) of the Act, which
provides the Commission broad discretionary authority to provide universal service support for “advanced services”
for all health care providers. See 47 U.S.C. § 254(h)(2)(A) (“the Commission shall establish competitively neutral
rules to enhance, to the extent technically feasible and economically reasonable, access to advanced
telecommunications and information services for all public and nonprofit … health care providers”); Texas Office of
Public Utility Counsel v. FCC
, 18 F.3d 393, 446 (5th Cir. 1999) (concluding that “the language in § 254(h)(2)(A)
demonstrates Congress's intent to authorize expanding support to ‘advanced services,’ when possible, for non-rural
health providers”).
38 2006 Pilot Program Order, 21 FCC Rcd at 11116-17, para. 17. The remaining applicant criteria included the
following: (1) identify the organization that will be legally and financially responsible for the conduct of activities
supported by the fund; (2) estimate the network’s total costs for each year; (3) describe how for-profit network
participants will pay their fair share of the network costs; (4) identify the source of financial support and anticipated
revenues that will pay for costs not covered by the fund; (5) list the health care facilities that will be included in the
network; (6) provide the address, zip code, Rural Urban Commuting Area (RUCA) code, and phone number for
each health care facility participating in the network; (7) provide a project management plan outlining the project’s
leadership and management structure, as well as its work plan, schedule, and budget; and (8) indicate how the
telemedicine program will be coordinated throughout the state or region. Id. In addition, applicants were instructed
to demonstrate that they have a viable strategic plan for aggregating usage among health care providers within their
state or region. Id. at 11116, para. 16. In selecting participants for the Pilot Program, the Commission also
indicated that it would consider whether an applicant has had a successful track record in developing, coordinating,
and implementing a successful telehealth/telemedicine program within their state or region, and the number of
health care providers that are included in the proposed network, with considerable weight given to applications that
propose to connect the rural health care providers in a given state or region. Id.
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15. The Pilot Program generated overwhelming interest from the health care community, and
the Commission received 81 applications representing approximately 6,800 health care providers.39 On
November 16, 2007, the Commission selected 69 Pilot Program applications covering 42 states and three
United States territories.40 The Commission awarded these 69 projects approximately $418 million in
total to construct or lease state or local regional broadband networks and provide advanced
communications services over their networks.41 Individual project awards, which were initially to be
utilized over a three-year period, ranged from about $93,000 to almost $25 million.42
16. The 69 selected applicants demonstrated to the Commission their overall qualifications,
consistent with the goals of the Pilot Program, to stimulate deployment of the broadband infrastructure
necessary to support innovative telehealth and, in particular, telemedicine services to those areas of the
country where the need for those benefits is most acute.43 The Commission explained that the selected
participants, among other things, described strategies for aggregating the specific needs of health care
providers within a state or region, including providers serving rural areas; provided strategies for
leveraging existing technology to adopt the most efficient and cost-effective means of connecting those
providers; described previous experience in developing and managing telemedicine programs; and had
detailed project management plans.44 Rather than limiting participation to a select few among the 69
qualified applicants, the Commission found that it would be in the best interests of the Pilot Program,
and appropriate as a matter of universal service policy, to accommodate as many of the qualified
applicants as possible.45

C.

Application Process

17. Selected Pilot Program participants are required to follow the normal Primary Program
procedures, as modified for the Pilot Program.46 The steps required for Pilot participants include the
following:
§

Organize Project and Prepare for Competitive Bidding:

Each Pilot project must
identify a lead entity and project coordinators, obtain letters of agency from each


39 2007 Pilot Program Selection Order, 22 FCC Rcd at 20370, para. 22; see also Wireline Competition Bureau
Announces OMB Approval of the Rural Health Care Pilot Program Information Collection Requirements and the
Deadline for Filing Applications
, WC Docket No. 02-60, Public Notice, 22 FCC Rcd 4770 (Wireline Comp. Bur.
2007).
40 2007 Pilot Program Selection Order, 22 FCC Rcd at 20370, para. 22.
41 See id. at 20360, 20429-30, App. B. As a result of the merger of certain projects, the withdrawal of others, and
the failure of some to meet certain deadlines, there are currently 50 active projects in the Pilot Program. See infra
Section III.A.
42 2007 Pilot Program Selection Order, 22 FCC Rcd at 20361, para 2. The lowest award was for $93,240 (Mountain
States Health Care Alliance); the highest was $24,689,016 (New England Telehealth Consortium). See Fig. 2,
below; USAC May 4 Data Letter at 2.
43 Id. at 20370, para. 22.
44 Id.
45 2007 Pilot Program Selection Order, 22 FCC Rcd at 20370, para. 22.
46 See 2006 Pilot Program Order, 21 FCC Rcd at 11115, para. 13 & n.19; see also 2007 Pilot Program Selection
Order
, 22 FCC Rcd at 20403-04, para. 83.
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participating health care provider, determine network configuration, identify source for
15 percent match, and prepare a Request for Proposal (RFP).47
§

Post Request for Services (Form 465)

: Each Pilot project must file Form 465 (which
includes an RFP and other required documentation) and obtain USAC verification of
eligibility of participating HCPs; USAC posts Form 465 on its web site, which starts the
competitive bidding process.48
§

Select Vendor and Contract for Services:

Each Pilot project must review bids, select a
vendor, and negotiate and execute a contract. Projects must wait at least 28 days after
posting of the RFP before committing to a particular vendor.49
§

Obtain USAC Funding “Commitment” (Form 466-A)

: Each Pilot project must file
the required documentation notifying USAC of the vendor selected and the associated
cost (Form 466-A).50 After reviewing, USAC “commits” the funds (i.e., will issue a
“Funding Commitment Letter” (FCL) specifying the amount of support).51
§

Receive Services and Notify USAC (Form 467):

The Pilot project orders the service
from the vendor, receives services, and notifies USAC that services have been initiated.
The vendor can then send the invoices to the project, which the project reviews and
forwards to USAC. USAC will then “disburse” the funds to the vendor. Projects have
six years from issuance of the initial funding commitment letter to invoice USAC. 52
18. In addition to complying with the modified Primary Program procedures detailed above,
Pilot Program participants must submit to the Commission and USAC quarterly reports detailing, among
other things, project management, included health care facilities, network specifications, costs, and
advancement of telemedicine benefits.53 Participants must state in these quarterly reports whether their
networks are or will become self-sustaining and, if so, how their networks are self-sustaining.54

D.

Post-Selection Developments

19. Since 2007, the Pilot Program has gone through many changes. Although the Pilot Program
was intended to be a three-year program with funding evenly allocated in Funding Years 2007-09, it has
taken more time than originally anticipated for the projects to identify their needs, design their networks,


47 2007 Pilot Program Selection Order, 22 FCC Rcd at 20403-06, paras. 83, 85-87.
48 Id. at 20412, para. 100.
49 See 47 C.F.R. § 54.603(b)(3).
50 2007 Pilot Program Selection Order, 22 FCC Rcd at 20403, para. 83.
51 Id. at 20409, para 93. Pursuant to the Commission’s rules, a rural health care funding year runs from July 1
through June 30 and rural health care support recipients, including Pilot Program participants, must submit their
FCC Forms 466-A for a given funding year by the end of that funding year, i.e., by June 30. See 47 C.F.R. §
54.623(b)-(c); see also FCC Form 466-A Instructions, available at http://www.usac.org/rhc/tools/required-
forms.aspx.
52 Rural Health Care Support Mechanism, WC Docket No. 02-60, Order, 26 FCC Rcd 6619, 6628, para. 19
(Wireline Comp. Bur. 2011) (2011 Extension Order). For instance, if a particular participant received its initial
funding commitment on April 7, 2011, it is required to complete invoicing by April 7, 2017.
53 2007 Pilot Program Selection Order, 22 FCC Rcd at 20423-24, para. 126, App. D.
54 Id. at 20416, para. 108, App. D.
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secure funding for administrative expenses, complete the application process, prepare RFPs, conduct
competitive bidding, and enter into contracts with vendors. In response, the Bureau has extended the
program to accommodate the projects’ needs. First, the Bureau permitted projects to carry over unused
funds from year to year during the duration of the award.55 Second, the Bureau extended the time for
projects to receive funding commitments from USAC for the entirety of their awards from June 30, 2010
to June 30, 2012.56 Finally, the Bureau extended the deadline for projects to invoice USAC for
disbursements from five years to six.57 As a result, Pilot projects have had more time than originally
provided in the 2007 Pilot Program Selection Order to create their networks.
20. Project Mergers and Withdrawals. Of the original 69 projects, several have merged,
withdrawn from the program, or failed to meet program deadlines, leaving the total number of projects
currently in the Pilot Program at 50. Appendix A lists the status of the 69 original awardees, by lead
state.
·
Mergers: From 2008 to 2009, projects merged in Mississippi, North Carolina, Ohio,
Pennsylvania and Texas, leaving a total of 62 projects.58
·
Withdrawals: An additional four of the 62 remaining projects withdrew from the Pilot
Program due to financial constraints, competitive bidding issues, or lack of health care
provider (HCP) interest. The awards to these four projects accounted for about $4.7 million,
or about 1 percent, of the Pilot Program.59
·
Failed to Meet Program Deadlines: In May 2011, the Bureau issued an order granting one-
year extensions of program deadlines for Pilot Program participants, subject to the condition
that the participant must have chosen a vendor and filed at least one complete request for
funding before June 30, 2011.60 The Bureau stated that projects that failed to meet the June
30, 2011, deadline for filing at least one complete request for funding would be deemed “no
longer capable of continuing in the Pilot Program,” and would “not be given additional time
beyond that date to request Pilot Program funding.”61 Of the remaining 58 projects, eight
projects did not meet the June 30, 2011 deadline.62 Two projects were able to accomplish
their goals with alternate funding sources.63 One project intended to use Pilot funds for
ineligible costs (personnel) and could not restructure its proposal in a way that attracted HCP
interest. Five projects, for other reasons, did not proceed with their projects on a timely


55 Letter from Dana R. Shaffer, Chief, Wireline Competition Bureau, to Scott Barash, Acting Chief Executive
Officer, Universal Service Administrative Company (Jan. 17, 2008), available at
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-279603A1.pdf.
56 See Rural Health Care Support Mechanism, WC Docket No. 02-60, Order, 25 FCC Rcd 1423 (Wireline Comp.
Bur. 2010) (2010 Extension Order); see also 2011 Extension Order, 26 FCC Rcd 6619.
57 2011 Extension Order, 26 FCC Rcd at 6628, para. 19.
58 A total of 12 projects merged in these five states. See USAC May 4 Data Letter at 1-2.
59 USAC May 4 Data Letter at 2. The four projects were the Alabama Pediatric Health Access Network, Rural
Healthcare Association of Alabama, KanEd, and the Healthcare Education and Research Network.
60 2011 Extension Order, 26 FCC Rcd at 6625, para. 10.
61 Id. at 6625, 6628, paras. 10, 22.
62 USAC May 4 Data Letter at 2.
63 Id.
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basis.64 These eight projects accounted for about $25.1 million, or about 6 percent of the
Pilot Program.65
21. In July 2010, the Commission issued a notice of proposed rulemaking seeking comment on
several proposed reforms to the RHC support mechanism.66 The reforms included a proposal to create a
new health infrastructure program that would support up to 85 percent of the construction costs of new
regional or statewide networks to serve public and non-profit health care providers in areas of the
country where broadband is insufficient or unavailable.67 Additionally, the 2010 NPRM also included a
proposal to establish a health broadband services program that would support up to 50 percent of the
monthly recurring costs for access to broadband services for eligible public or non-profit health care
providers.68 The 2010 NPRM is currently pending. In November 2010, the Government Accountability
Office recommended, in part, that the Commission develop and execute a sound performance evaluation
plan for the current programs, and develop sound evaluation plans as part of the design of any new
programs proposed in the 2010 NPRM.69
22. In an order released July 6, 2012, the Commission provided temporary “bridge” funding to
those Pilot projects with sites that will have exhausted their Pilot funding before the end of funding year
2013 (before June 30, 2013), in order to maintain the status quo for these projects while a process is
established to transition them into a permanent rural health care support mechanism.70 In a Public
Notice released July 19, 2012, the Wireline Competition Bureau sought additional comment on several
issues in the 2010 NPRM, in order to develop a more robust record, particularly in light of the experience
in the Pilot Program since the issuance of the NPRM.71

III.

DESCRIPTION OF THE PILOT PROJECTS

23. In this section we describe the characteristics of the Pilot projects. Each project is by
definition a consortium of individual health care providers. We first detail the varying size of the
projects in terms of the number of health care providers participating in each project. We then describe
the funding awards, commitments, and disbursements for the projects. 72 Of the 69 that received funding
awards under the Pilot Program, 50 projects are currently active and have received funding
commitments. As detailed above, the 19 projects that are no longer active either have merged with other
projects or, for a variety of reasons, have withdrawn or have been disqualified from participating in the
Program.73


64 Id.
65 Id.
66 See 2010 NPRM, 25 FCC Rcd 9371.
67 Id. at 9373, para. 3.
68 Id.
69 GAO Report at 56-57.
70 Rural Health Care Support Mechanism, Order, WC Docket No. 02-60, FCC 12-74 (rel. July 6, 2012) (Bridge
Funding Order
).
71 Rural Health Care Support Mechanism, WC Docket No. 02-60, Public Notice, DA 12-1166 (Wireline Comp.
Bureau, rel. July 19, 2012).
72 See supra Section II.C. for an explanation of “commitments” and “disbursements."
73 See supra Section II.D.
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24. We then detail the geographic coverage of the active Pilot projects, which include sites in 38
states and three territories. Most projects include urban health care providers but most projects are
predominantly made up of rural health care providers.74 This section also details the number and type of
health care providers participating in the projects, as well as their network design and architecture.
25. Finally, we describe how the networks have been implemented and the types of broadband
services utilized by the projects. Many of the projects chose to purchase broadband services from third
parties rather than construct and operate a broadband network themselves. As intended, most health care
providers participating in the Pilot Program obtained the high-bandwidth broadband connections
sufficient to support health IT applications. The Pilot Program also has enabled many of the projects to
exercise increased purchasing power and secure more advantageous pricing than would generally have
been possible for an individual health care provider.

A.

Size of Projects and Awards

26. Size of Projects. Pilot projects vary widely in size depending on their scope. For example,
Palmetto State Providers Network (PSPN), a statewide backbone network that connects rural and
underserved areas in South Carolina, includes 120 to 150 health care provider sites in all 46 counties of
the state.75 On the other hand, Pennsylvania Mountains Healthcare Alliance (PMHA), a regional
network located in central and western Pennsylvania, is comprised of only 21 hospitals.76 In their
original proposals, Pilot projects identified over 6,400 health care providers that expressed interest in
participating in their networks.77 As of the end of January 2012, USAC had verified the eligibility of
5,475 health care providers participating in Pilot Program networks and issued funding commitments to
approximately 2,100 health care providers.78
27. Twelve projects had ten or fewer sites in their original proposals. At the other end of the
spectrum, 18 projects had over 100 sites in their original proposals.79 The projects still range widely in
size, as shown in Figure 1. As of January 2012, about a third of active projects included at least 50
individual health care providers that had received funding commitments. Another third had 11 to 50
such providers. Of the remaining third, some projects are lagging behind in implementation, but several
are smaller projects (fewer than 10 health care providers) by design. Seven of the projects had received
funding commitments for only one site as of January 2012.80 As noted above, USAC has received many
funding commitment requests since January 31, 2012, and the deadline for filing all funding
commitment requests was June 30, 2012. When those requests are all processed, the numbers of HCPs
in many of the projects will likely be higher.


74 Due to the inherent limitations of the Commission’s definition of “rural” (or any definition of “rural”), the term
“urban” can include sites located in relatively sparsely-populated areas. For example, Orangeburg County Clinic in
Holly Hill, SC (pop. 1,277), a health care provider participating in Palmetto State Providers Network’s Pilot project,
is characterized as “urban.” The largest cities closest to Holly Hill are Charleston, SC, and Columbia, SC,
respectively 50 and 69 miles away from Holly Hill.
75 Pilot Conference Call Mar. 13 Ex Parte Letter (PMHA et al.) at 1.
76 Id.
77 USAC May 4 Data Letter at 1.
78 USAC 2011 Annual Report at 12.
79 See Fig. 1.
80 The seven projects that have received only one funding commitment letter to date have proposed to include
multiple sites as required by the 2006 Pilot Program Order, but had not yet received funding commitments for those
additional sites as of January 2012.
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Figure 1 – Project Size (By Number of HCPs)81

20
18
18
16
16
14
13
12
12
11
12
10
10
8
8
8
# Of Projects
6
4
4
2
0
10 or less
11-25
26-50
51-100
100 or more
# of HCPs in Project
Original Award
Receiving Commitments
28. Awards, Commitments, and Disbursements. Figure 2 shows the award for each of the
original 69 pilot projects, from low to high. Total project awards ranged from $93,240 to $24,689,016.82
Support per site ranged from $3,400 to as much as $2.5 million, with an average of $70,000 per site.83


81 USAC Data Letter Aug. 9 at App. D. All projects proposed, and intend, to connect multiple health care providers.
As of January 31, 2012, there were seven projects with only one HCP receiving a funding commitment. Four of
these projects were instructed by USAC to assign the cost of the network design study to the lead entity
(consortium), resulting in the data showing only one HCP receiving a commitment for those projects that had not yet
implemented their networks as of January 31, 2012. The remaining three projects filed a commitment request for
only one HCP in order to meet the June 30, 2011 deadline to request at least one commitment. See id.
82 2007 Pilot Program Selection Order, 22 FCC Rcd at 20429-30, App. B.
83 USAC Observations Letter at 1.
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Figure 2 – Pilot Projects – Original Award Amount84

$30.00
$25.00
$20.00
$15.00
$10.00
Original Award Amount (Millions)
$5.00
$0.00
29. One way to measure the progress of projects is to review what percentage of the original
award has been committed (i.e., the project can begin receiving services because it has completed
competitive bidding, selected a vendor, and signed a contract) and disbursed (i.e., the project has
received services and the vendor has been reimbursed by USAC). Figures 3(a) and 3(b) show the Pilot
projects by the percentages of awards that have been committed and disbursed, respectively, as of
January 30, 2012. The percentage of each project’s award that has been committed and disbursed varies
significantly across projects.


84 2007 Pilot Program Selection Order, 22 FCC Rcd at 20429-30, App. B.
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Figure 3(a) – Pilot Projects, Percentage of Award Committed85

100%
90%
80%
70%
60%
50%
40%
30%
% of Award Committed
20%
10%
0%
Pilot Projects Ordered by % of Award Committed

Figure 3(b) – Pilot Projects, Percentage of Award Disbursed86

100%
90%
80%
70%
60%
50%
40%
30%
% of Award Disbursed
20%
10%
0%
Pilot Projects Ordered by % of Award Disbursed
30. Commitments. As of the end of January 2012, USAC had committed $217 million to
approximately 2,100 health care providers participating in the Pilot Program, or about $100,000 on
average per health care provider.87 About two-thirds of active Pilot projects had received commitments


85 USAC Data Letter Aug. 9 at App. A.
86 Id. at App. B.
87 USAC Data Letter May 4 at 2. By way of comparison, from January 1, 1998 through January 31, 2012, the
Primary Program had committed $232 million to 5,536 health care providers (excluding Alaska) (or about $45,000
each), with an additional $273 million committed to 283 Alaska health care providers. Id. at 2-3. Health care
providers in Alaska face unique costs because the state’s vast size, harsh winter weather, and sparse population
(continued . . .)
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for the majority of their individual awards, while 44 percent of projects had received commitments for
81 percent or more of their awards.88 On the other hand, about a quarter of projects had yet to obtain
commitments for more than 20 percent of their awards by this date.89
31. The deadline for submitting all remaining requests for funding was June 30, 2012.90 As of
July 3, 2012, USAC had received requests from all 50 active projects and had 108 funding requests to be
processed.91 The 108 pending funding requests represent approximately $91.60 million for 30 projects;
USAC estimates that once processed, total funding commitments requested will be $368.62 million,
which is 88.23 percent of the original total award amount of $417.78 million.92
32. Disbursements. As of the end of January 2012, USAC had disbursed approximately $100
million, or half of the amount for which Pilot projects had received funding commitments.93 Because
each project has up to six years from issuance of its first funding commitment letter to complete its
invoicing, the rate of disbursements lags behind the rate of commitments.94 While slow initially,
disbursement amounts have accelerated each year of the Pilot Program, as shown in Figure 4 below.
33. Figure 3(b) above shows that projects are in widely different stages of completion and
spending. Only about 28 percent of projects (14) had received disbursements of over half of their award,
as of January 30, 2012.95 About a quarter of the projects had received disbursements of less than 20
percent of their awards by that date.96 On the other hand, some advanced projects have HCPs nearing
the conclusion of Pilot-funded activity within the next funding year.97 USAC estimates that during the
2012 funding year (July 2012 to June 2013), approximately 484 HCPs in 14 projects, or approximately a
quarter of HCPs participating in the Pilot Program, will have spent all of the Pilot money allocated
within the project’s Pilot award.98 As noted above, in an order released July 6, 2012, the Commission
(. . . continued from previous page)


make it challenging to deploy fiber or wireless networks in many rural areas. In many parts of rural Alaska,
expensive satellite services may be the only option available.
88 USAC Aug. 2 Data Letter at 2. In some cases, Pilot projects may not seek commitments for the full amount of
their awards – if, for example, the competitive bidding process or other cost savings allow the project to achieve its
goals for less than the amount requested in the project’s initial application.
89 Id.
90 The original deadline for requesting all remaining funding for the Pilot Program on FCC Form 466-A was June
30, 2010. 2007 Pilot Program Selection Order, 22 FCC Rcd at 20370, para. 23. The Bureau has twice extended the
deadline for submitting requests for funding. June 30, 2011 was the deadline for projects to receive their first
funding commitment letter or file a complete Form 466-A packet with USAC. 2011 Extension Order, 26 FCC Rcd
at 6626-27, para. 14. June 30, 2012 is the deadline for projects to request all remaining funding in their award on
FCC Form 466-A. Id. at 6627-8, para. 18.
91 USAC Aug. 2 Data Letter at 2.
92 Id.
93 USAC May 4 Data Letter at 3.
94 2007 Pilot Program Selection Order, 22 FCC Rcd at 20370, para. 94. See also supra Section II.D.
95 USAC Aug. 2 Data Letter at 2
96 Id.
97 USAC Feb. 17 Letter at 1.
98 Id.
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provided temporary “bridge” funding to those projects with sites that will have exhausted their Pilot
funding before the end of funding year 2012 (before June 30, 2013).99

Figure 4 - Cumulative Pilot Program Disbursements100

$120
$100
$95.4
$80
$59.5
$60
$40
Amount (Millions)
$24.1
$20
$11.3
$0.5
$0
2008
2009
2010
2011
Total
(Amounts Are as of December 31 of the Applicable Year)

B.

Geographic Coverage of Projects

34. Interactive Map of Projects. Currently, active Pilot projects include sites in 38 states and
three territories, and many of the projects are state-wide or multi-state regional networks.101 An
interactive map showing the broadband connectivity enabled by the Pilot Program as of January 31,
2012, can be found at http://www.fcc.gov/maps/rural-health-care-pilot-program. The map shows the
health care provider locations that have received commitments for Pilot Program funding, and for each
location (via mouse-over), the speed of the connection, the type of health care provider, and the urban or
rural status of the health care provider.


99 See supra para. 22; see also Bridge Funding Order.
100 USAC May 4 Data Letter at 3.
101 Id., App. A; see also Appendix A to this Staff Report.
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Figure 5 – Map of Pilot Projects102

(available at http://fcc.gov/maps/rural-health-care-pilot-program)
35. Active pilot projects currently include health care providers in the 38 states listed in
Appendix A and in the territories of Guam, American Samoa, and in the Northern Mariana Islands. Of
the 11 states without Pilot project participants, five are almost entirely urban (Maryland, Delaware, New
Jersey, Rhode Island, and Connecticut).103 No projects applied from Oklahoma or Idaho.104
Massachusetts was not awarded a Pilot project.105 Projects in Kansas and Florida withdrew, one due to
an inability to meet competitive bidding requirements (Kansas) and the other because it obtained


102 Rural health care providers participating in Pilot Program networks are shown in green; urban health care
providers are shown in red. The graphic is intended to illustrate the coverage of Pilot Program commitments as of
January 31, 2012, and has two limitations that do not exist in the online map. First, the graphic does not show
Alaska, Hawaii, and U.S. territories (for space reasons). Second, again due to space reasons, the graphic does not
include a marker for all health care providers who had received commitments as of January 31, 2012. The
interactive map allows viewers to zoom in on different areas of the country to fully see all health care providers
receiving support in a particular area.
103 These states also have no federally designated rural health clinics or critical access hospitals. See Critical Access
Hospitals in the Rural Health Care Program. See Letter from Craig Davis, Vice President of Rural Health Care,
USAC, to Julie Veach, Chief, Wireline Competition Bureau, WC Docket No. 02-60 (filed Jul. 19, 2012)
(attachment) (USAC Critical Access Hospitals Report).
104 See 2007 Pilot Program Selection Order, 21 FCC Rcd at 20426-28, App. A (listing Pilot Program applicants).
We note that Oklahoma has a robust state universal service program for the communications needs of rural health
care providers. See Oklahoma Corporation Commission, Public Utility Division, Universal Service Fund, available
at
http://www.occeweb.com/pu/OUSF/OUSF.htm (last visited April 2, 2012); see also Federal Communications
Commission Response to United States House of Representatives Committee on Energy and Commerce, Universal
Service Fund Data Request 2: States with a Statewide Universal Service Fund, at 6, 10 (dated June 22, 2011),
available at http://republicans.energycommerce.house.gov/Media/file/PDFs/2011usf/ResponsetoQuestion2.pdf.
105 Massachusetts had one application, which was denied in part because the application sought support “focused not
for a network dedicated to telehealth, but instead for a network for use by public schools, community colleges, and
commercial firms.” See 2007 Pilot Program Selection Order, 22 FCC Rcd at 20390, para. 57.
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Recovery Act funding for its project (Florida).106 Finally, projects in Mississippi and Washington State
failed to meet the June 30, 2011 deadline for submitting their first funding commitment requests.107

C.

Rural/Urban Composition of Projects

36. Rural versus Urban Sites. As discussed above, in the Commission’s Primary Rural Health
Care Program, only “rural” health care providers within the meaning of the Commission’s rules may
receive funding.108 By contrast, in the Pilot Program, the Commission has specifically allowed projects
to include urban health care providers, as long as the urban HCPs are not-for-profit or public, and as long
as there is a more than a de minimis representation of rural HCPs in the project.109
37. As of January 2012, approximately $139 million, or about 65 percent of committed funds,
had been committed to health care providers in rural locations.110 Approximately $78 million, or about
35 percent, of committed funds had been committed to health care providers located in urban areas. 111
This 35 percent figure attributed to urban locations, however, is likely overstated because shared
equipment and services are often attributed to urban locations, even though the shared equipment and
services are used by all the network sites.112 In addition to network design studies, “shared” equipment
and services (i.e., equipment and services that benefit the entire network and not just one site) would
include switches, routers, and firewalls that are located at data centers or other facilities of lead entities
that often are located in urban areas.113


106 USAC May 4 Data Letter at 2.
107 Id.
108 47 U.S.C. § 254(h)(1)(A).
109 See generally 2006 Pilot Program Order, 21 FCC Rcd at 1111, para. 3; 2007 Pilot Program Selection Order, 22
FCC Rcd at 20421, para. 120.
110 USAC May 4 Data Letter at 3. Whether a health care provider is “rural” depends on where it is located in
relationship to any Core Based Statistical Area (CBSA). An area located outside of any CBSA is rural. However,
areas within a CBSA can be rural, depending on the characteristics of the census tract where it is located. See 2004
Second Report and Order and Further Notice
, 19 FCC Rcd at 24619-20, para. 12; see also 2006 Pilot Program
Order
, 21 FCC Rcd at 11116, para. 16 (stating that the Commission will not accept proposals to participate in the
Rural Health Care Pilot Program that do not have more than a de minimis number of rural health care providers).
The term “urban,” used here to mean outside “rural” areas as defined by the Commission, may also include sites
located in areas that are relatively sparsely populated, but do not qualify as “rural.”
111 USAC May 4 Data Letter at 3.
112 USAC May 30 Data Letter at 2.
113 Id.
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Figure 6 – Urban/Rural Composition of Each Pilot Project114

180
160
140
120
100
80
# of HCPs 60
40
20
0
Projects Ordered By Total # of HCPs With Commitments
Rural HCP
Urban HCP
38. Figure 6 above shows the number of rural and urban health care providers participating in
each Pilot project, ranging from the smallest projects to the largest projects. As shown in the figure,
most projects are made up predominantly of rural health care providers and as of January 31, 2012, only
six projects do not have an urban provider in their network.115 A few projects are large-scale, statewide
networks, consistent with the 2006 Pilot Program Order (which encouraged such networks).116 The
largest five projects (at the far right) are statewide networks in West Virginia, Colorado, Oregon, South
Carolina, and California, as shown in the health care provider map located at http://fcc.gov/maps/rural-
health-care-pilot-program. Due to their statewide footprints, which include densely populated regions in
their networks, these networks have larger percentages of health care providers located in urban areas
than do smaller, regional networks that focus their coverage on specific rural areas within a state.
Approximately 35 percent, or 733, of the 2,107 health care providers that had received funding
commitments in the Pilot Program as of January 31, 2012, are classified as urban.117

D.

Types of Health Care Providers Participating in Projects

39. Types of Health Care Providers in Projects. Section 254(h)(7)(B) of Act identifies the types
of health care providers eligible to participate in the Commission’s rural health care program: not-for-
profit hospitals;118 rural health clinics; community mental health centers; community health centers of


114 USAC Aug. 9 Data Letter at App. E.
115 USAC Aug. 2 Data Letter at 2.
116 2006 Pilot Program Order, 21 FCC Rcd 11111, para. 16; 2007 Pilot Program Selection Order, 22 FCC Rcd at
20370, para. 24.
117 USAC June 27 Data Letter at 1. The mix of rural and urban providers has remained largely consistent since
January 2012. See USAC Aug. 2 Data Letter at 3 (noting that as of July 19, 2012, urban providers make up 33.02%
of Pilot sites).
118 In 2003, the Commission determined that dedicated emergency rooms of rural for-profit hospitals qualified as
“public” health care providers under section 254(h)(1)(A) of the Act, which makes “non-profit” or “public” health
care providers eligible for rural health care support. The Commission held that dedicated emergency departments in
(continued . . .)
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health centers providing health care to migrants; local health departments or agencies; post-secondary
educational institutions offering health care instructions, teaching hospitals or medical schools; and
consortia of the above. As depicted in Figure 7, of these categories, 773 (37 percent) of Pilot
participants who have received commitments as of January 2012 are hospitals, 547 (26 percent) are rural
health clinics (or the urban equivalent), 309 are community/migrant health centers (15 percent), and 318
are community mental health centers (15 percent).119

Figure 7 – Number of HCPs Receiving Funding Commitments120

Community Mental
Health Center
318
Rural Health Clinic or
Urban Equivalent
547
Community / Migrant
Health Center
309
Local Health
Department or Agency
89
Teaching Hospital,
Medical School, Post-
Secondary Institution
Not-For-Profit Hospital /
28
Dedicated ER of Rural,
For-Profit Hospital
773
40. As noted above, as of January 2012, USAC had verified the eligibility of approximately
5,475 health care providers participating in Pilot Program networks, and issued Pilot Program funding
(. . . continued from previous page)


for-profit hospitals are “public” health care providers because they are required, under the Emergency Medical
Treatment and Labor Act to provide medical screening examinations to all patients who present themselves and to
stabilize or arrange for appropriate transfer of those patients with emergency conditions. 2003 Order and Further
Notice
, 18 FCC Rcd at 24553-54, para. 13. In addition, the Commission also held that dedicated emergency
departments in for-profit rural hospitals constitute “rural health clinics” because they typically provide the types of
medical services often provided in traditional health clinics and, in many instances, are the only health care
providers in rural areas serving the medical needs of the community. Id. As a practical matter, however, broadband
purchasing decisions for a hospital’s emergency room are likely to take place in the broader context of broadband
purchasing decisions for the hospital as a whole. Therefore, solely for purposes of analyzing the results of the Pilot
Program in this Report, the staff has included data on the dedicated emergency rooms of for-profit hospitals within
the “not-for-profit hospital” category.
119 USAC Aug. 9 Data Letter at App. F.
120 Id.
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commitments to more than 2,100 health care providers.121 Most projects included a wide range of HCP
types.122 The Pilot Program provides funding for a number of “safety net provider” health care sites,
including many Critical Access Hospitals, Rural Health Clinics, and Federally Qualified Health
Centers.123 Several Pilot projects include health care provider sites that are located on Tribal lands or
that serve Indian populations.124
41. The Commission also permits Pilot projects to include health care provider sites that are not
eligible to receive funding under the rural health care program (e.g., for-profit providers), so long as they
pay for their own connections.125 Nineteen projects have reported a total of approximately 138 such
ineligible health care providers that participate in their networks by paying the undiscounted cost of the
connection.126


121 USAC 2011 Annual Report at 12. At the initial application stage (Form 465), Pilot projects submitted a list of all
HCPs that provided a Letter of Authority, and USAC then verified the eligibility of the HCPs. See Section II.C
above. Only those HCPs for which eligibility has been verified may receive a funding commitment (Form 466-A).
See id. In comparison, the Primary Program funds approximately 2,000 to 3,000 eligible health care providers
annually. See 2010 Universal Service Monitoring Report at Table 5.2, 2011 Universal Service Monitoring Report at
Table 2.22 (2,695 health care providers received Primary Program commitments in FY 2007; 2,871 in FY 2008;
3,164 in FY 2009; and 1,941 in FY 2010).
122 See Appendix C (detailing the number of each HCP type that received a funding commitment as of January 31,
2012).
123 See John Gale Mar. 29 Ex Parte Letter (attachments) (Centers for Medicare and Medicaid Services Fact Sheets
on Critical Access Hospitals, Rural Health Clinics, and Federally Qualified Health Centers). According to the
Centers for Medicare and Medicaid Services (CMS), critical access hospitals are Medicare-participating hospitals
that, among other characteristics, furnish 24-hour emergency care seven days a week, are located more than 35 miles
from the nearest hospital, and have an average annual length to stay of 96 hours or less per patient for acute care.
Federally qualified health centers are “safety net” providers such as community health centers, public housing
centers, outpatient health programs funded by the Indian Health Service, and programs serving migrants. Rural
health clinics provide the services of physicians, nurse practitioners, physicians’ assistants, midwives, clinical
psychologists, and clinical social workers, along with services incident to those furnished by these providers. See
id.; see also
USAC Critical Access Hospitals Report at 1.
124 These include: (1) the Southwest Telehealth Access Grid, which is a multi-state regional network in the
southwestern United States; (2) the California Telehealth Network, which includes several HCP sites that serve
Tribal populations; (3) the Alaska eHealth Network, which to date has received funding commitments only for
network design studies; and (4) the Health Information Exchange of Montana, which serves four HCP sites on
Tribal lands. See Letter from Jeffrey Mitchell, Counsel for Health Information Exchange of Montana, to Marlene
Dortch, Secretary, FCC, WC Docket No. 02-60 (filed June 21, 2012). In addition, under the Commission’s Primary
program, substantial funds ($35,625,539 in 2010) go to the Indian Health Service and directly to Tribal entities to
fund health care facilities located on Tribal lands or serving rural Tribal populations. USAC Aug. 2 Data Letter at 1.
See also IHS Apr. 11 Ex Parte Letter at 1 (summary of discussion that the rural health care program had been useful
in funding broadband connections in many tribal areas and communities). In Alaska, the average effective discount
under the Primary Program is 97.89 percent, so even though there are substantial Native populations in Alaska, there
may be less incentive in that state to participate in the Pilot Program, which has an 85 percent discount. USAC May
30 Data Letter at 1.
125 2006 Pilot Program Order, 21 FCC Rcd at 11116, para 17 (requiring applicants to “[d]escribe how for-profit
network participants will pay their fair share of network cost.”); 2007 Pilot Program Selection Order, 22 FCC Rcd
at 20381-20382, para. 47 (describing how for-profit network participants on Pilot networks will pay for their fair
share of the network and other costs).
126 See Quarterly Report of Arkansas Telehealth Network at 17 (1 site); Quarterly Report of Colorado Health Care
Connections, WC Docket No. 02-60 at Addendum A (filed Jan. 27, 2012) (5 sites); Quarterly Report of Health
Information Exchange of Montana at 5 (1 site); Quarterly Report of Iowa Health Systems at 3 (2 sites); Quarterly
(continued . . .)
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42. Figure 8 shows the breakdown within each HCP category of the number of rural and urban
health care providers with funding commitments.

Figure 8 – Rural/Urban, by HCP Type127

Not-For-Profit Hospital / Dedicated ER of
Rural, For-Profit Hospital
Rural Health Clinic or Urban Equivalent
Community Mental Health Center
Community / Migrant Health Center
Local Health Department or Agency
Teaching Hospital, Medical School, Post-
Secondary Institution
0
100 200 300 400 500 600 700 800
# of HCPs with Commitments
Rural
Urban
(. . . continued from previous page)


Report of Iowa Rural Health Telecommunications Program, WC Docket No. 02-60 at 13 (filed Jan. 13, 2012) (2
sites); Quarterly Report of Michigan Public Health Institute at Appendix A (2 sites); Quarterly Report of Missouri
Telehealth Network at 3, 5 (unclear how many sites); Quarterly Report of New England Telehealth Consortium, WC
Docket No. 02-60 at 3-79 (filed Jan. 27, 2012) (53 sites); Quarterly Report of North Country Telemedicine Project,
WC Docket No. 02-60 at 6 (filed Jan. 30, 2012) (1 site); Quarterly Report of Oregon Health Network at Attachment
A (2 sites); Quarterly Report of Palmetto State Providers Network, WC Docket No. 02-60 at 3-24 (filed Jan. 30,
2012) (7 sites); Quarterly Report of Pennsylvania Mountains Healthcare Alliance, WC Docket No. 02-60 at 6 (filed
Feb. 6, 2012) (1 site); Quarterly Report of Rocky Mountain HealthNet, WC Docket No. 02-60 at Addendum A (filed
Jan. 27, 2012) (2 sites); Quarterly Report of Southern Ohio Healthcare Network at Addendum II (43 sites);
Quarterly Report of Southwest Telehealth Access Grid (SWTAG), WC Docket No. 02-60 at Appendix A (filed Jan.
27, 2012) (5 sites); Quarterly Report of Southwest Alabama Mental Health Consortium, WC Docket No. 02-60 at 5
(filed Jan. 30, 2012) (1 site); Quarterly Report of Utah Telehealth Network, WC Docket No. 02-60 at RFP02
(filed Jan. 30, 2012) (2 sites); Quarterly Report of Western New York Rural Area Health Education Center, WC
Docket No. 02-60 at 5 (filed Oct. 26, 2011) (1site); Quarterly Report of West Virginia Telehealth Alliance, WC
Docket No. 02-60 at Appendix A (filed Jan. 30, 2012) (7 sites).
127 USAC Aug. 9 Data Letter at App. H.
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43. Leadership of Projects. USAC observes that the most successful Pilot projects have been
led by universities, state entities, a hospital or medical association, or were non-profits created to
advance telehealth and telemedicine initiatives in the state or region.128 As shown below, the majority of
projects designated a health care provider (or collaboration thereof) as their project coordinator.

Figure 9 – Pilot Project Coordinators129

Type of entity

Percentage

Health care provider
32%
Health care provider collaboration
24%
State university
18%
Multi-stakeholder collaboration
8%
Healthcare provider and university collaboration
8%
No response, likely not for profit health care consulting org.
4%
Government
4%
No response, likely health care provider collaboration
2%
Total
100%

E.

Enterprise-Grade Services

44. The OBI Health Care Technical Paper found that health care providers typically need three
characteristics from their broadband services – (1) bandwidth adequate to support the number and types
of applications used, with two popular applications being video consultations and transfer of high-
resolution medical images; (2) service quality (i.e., reliability, latency, packet loss, and jitter), certain
levels of which are required, for example, to support real-time, interactive video consultations; and (3)
security required to allow health care providers to comply with Health Insurance Portability and
Accountability Act (HIPAA) security requirements for health information.130 The Technical Paper noted
that in order to obtain these characteristics, most larger health care practices will require “Dedicated
Internet Access” (i.e., service offerings geared toward enterprise, rather than small business customers).131
These enterprise solutions typically have several characteristics that make them suitable for many health
care providers: higher guaranteed bandwidths; broader and stricter Service Level Agreements (SLAs) that
can include minimum service quality guarantees; security through various means, including a dedicated
connection and/or software-based solutions; and the ability to allocate bandwidth levels and prioritize
certain types of traffic according to health care provider needs.132
45. Not surprisingly, Pilot projects proposed dedicated, enterprise-style network architectures,
designs, and topologies customized for health care purposes. Almost all projects that purchased services
from third parties for their networks chose to obtain primarily Ethernet or MPLS-enabled services and to
obtain customized arrangements with service providers to meet the needs of their participating health care


128 USAC Observations Letter at 5.
129 Based on staff review of Pilot participant 2011-2012 quarterly reports.
130 See generally Federal Communications Commission, Health Care Broadband in America, Early Analysis and A
Path Forward (August 2010) (OBI Health Care Technical Paper).
131 OBI Health Care Technical Paper at 8.
132 Id.
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providers.133 Furthermore, many of these projects obtained plant or infrastructure upgrades from their
service provider as part of project implementation.134 For example:
·
Oregon Health Network (OHN) states that it was able to obtain high service level
requirements which, combined with a single point of peering for all vendors and an OHN
Network Operations Center that provides 24/7/365 monitoring of all connections, “proved to
be a game-changer for health care providers looking to make the jump from siloed health care
delivery systems of the past to the future integrated, coordinated and patient centered care
models of the future.”135 OHN’s network design “allows for the quick adoption and use of
telehealth and health IT administrative applications to run over the network with minimum
barriers.”136
·
Similarly, the North Carolina Telehealth Network (NCTN) is a private network with a
connection to the public Internet and Internet2, which provides connectivity beginning at 10
Mbps. NCTN provides more reliability and better latency control for video-based and other
applications that need high reliability (e.g., remote ICU monitoring). Thus, NCTN’s network
is able to serve public health agencies, which are core responders in emergency response
situations and need access to a network that will be available in emergency response
situations. The NCTN network also provides dual redundancy and allows members to
communicate with each other without crossing the public Internet.137
·
The Sanford Health Collaboration and Communication Channel (with sites in South Dakota,
Iowa, and Minnesota) also used Pilot funding to upgrade from T-1 lines to Ethernet services.
Sanford stated that upgrading to Ethernet helped it to roll out electronic health records,
because T-1s were not adequate for this purpose.138


133 USAC June 27 Data Letter at 1. The Telecommunications Industry Association notes that Ethernet “provides
much faster speeds than other technologies at substantially lower costs” and “is a cost-effective technology for
companies with high bandwidth needs” who need to connect to data centers, make other point-to-point connections,
or with multiple locations. Over fiber networks, carrier Ethernet can provide speeds of up to 10 Gbps at a much
lower cost than legacy technologies, although Ethernet services are also available over copper facilities. See
Telecommunications Industry Association, 2012 ICT Market Review and Forecast, at 3-8, 3-38, 3-42 (TIA 2012
Market Review and Forecast
). MPLS is a network protocol that allows providers to create a single integrated
network infrastructure that can be used to provide multiple services to the enterprise customer. See Universal
Service Contribution Methodology; A National Broadband Plan For Our Future,
WC Docket No. 06-122, GN
Docket No. 09-51, Further Notice of Proposed Rulemaking, 27 FCC Rcd 5357, 5380, para. 41 (2012). TIA notes
that carriers are converting to MPLS in their core networks to facilitate IP transport, and that MPLS-enabled
networks can establish different classes of services and offer guarantees of service without dedicated circuits.
MPLS-enabled networks can also provide the security of virtual private circuits with the any-to-any connectivity of
router-based networks. Furthermore, carriers charge less for MPLS than for other technologies because the costs for
provisioning and supporting it are lower. TIA 2012 Market Review and Forecast at 3-8, 3-40.
Of course, projects that chose to construct their own networks also had the ability to control service quality
and reliability over the network. See, e.g., Pilot Conference Call Mar. 26 Ex Parte Letter (WNYRAHEC et al.) at 1.
134 See USAC Aug. 2 Data Letter at 3.
135 OHN Feb. 28 Ex Parte Letter at 2.
136 Id.
137 Pilot Conference Call Mar. 13 Ex Parte Letter (PMHA et al.) at 2; Quarterly Report of the North Carolina
Telehealth Network, WC Docket No. 02-60, at 28-9 (filed Jan. 31, 2012).
138 Pilot Conference Call Mar. 26 Ex Parte Letter (WNYRAHEC et al.) at 1-2.
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46. In addition, over 20 Pilot projects have high-bandwidth connections to other health care
provider networks through either Internet2 or National LambdaRail, though many do not rely on Pilot
funding for those connections.139

F.

Self-Construction versus Services Purchased from Third Parties

47. As noted above, the Pilot Program allows participants to build or lease their networks.140
Initially, in the 2006 Pilot Program Order, the Commission provided support through the Rural Health
Care Pilot Program for public and non-profit health care providers to construct and own their
networks.141 This was later clarified to allow projects also to subscribe to leased transmission services as
a means of creating their broadband networks.142 A majority of Pilot projects have chosen to purchase
broadband services rather than construct and operate a broadband network themselves. Only eight
projects used Pilot Program support for construction, and only two constructed their entire networks.143
Instead, most have purchased services, with a significant number using the funding to purchase long
term prepaid leases or indefeasible rights of use (IRUs).144 As of January 2012, nearly 80 percent of
funding commitments were attributable to purchased services, as shown in Figures 10(a) and 10(b).


139 See USAC May 4 Data Letter at 4. Pilot Program rules allowed projects to connect to Internet2 and National
LambdaRail without requiring projects to go through the competitive bidding process. See Rural Health Care
Support Mechanism
, WC Docket No. 02-60, Order on Reconsideration, 22 FCC Rcd 2555 (2007) (Pilot Program
Order on Reconsideration
). Based on available data, several projects have availed themselves of this opportunity.
The following Pilot projects have requested and received funding commitments from USAC for their Internet2
connections (no projects have sought funding for membership to the National LambdaRail network): California
Telehealth Network, Iowa Health Systems, North Carolina Telehealth Network, St. Joseph’s Hospital and Texas
Health Information Network Collaborative. USAC May 4 Data Letter at 4.
140 See supra n.30 and accompanying text.
141 2006 Pilot Program Order, 21 FCC Rcd at 11115, paras. 3, 14.
142 See 2007 Pilot Program Selection Order, 22 FCC Rcd at 20397-98, para. 74 (“In the 2006 Pilot Program Order,
the Commission stated that funding provided under the Pilot Program would be used to support the costs of
constructing dedicated broadband networks that connect health care providers in a state or region. . . Further, to the
extent that a selected participant subscribes to carrier-provided transmission services. . . in lieu of deploying its own
broadband network and access to advanced telecommunications and information services, the costs for subscribing
to such facilities and services are eligible”) (citing 2006 Pilot Program Order, 21 FCC Rcd at 11114, para. 10).
143 Projects that used Pilot Program funds to construct and own their networks entirely include Northeast Ohio
Regional Health Information Organization and Rural Nebraska Healthcare Network. The Iowa Rural Health
Telecommunications Program, Illinois Rural HealthNet Consortium, Health Information Exchange of Montana,
Michigan Public Health Institute, St. Joseph’s Hospital and West Virginia Telehealth Alliance used Pilot Program
funds to construct and own parts of their networks. USAC May 4 Data Letter at 3, App. D.
144 USAC Observations Letter at 7-8. See Section V.C. infra, which discusses the reasons cited by some Pilot
projects for relying on purchased services rather than constructing and owning their networks. For example, the
Colorado Telehealth Network stated that it was able to include more providers on its network through purchasing
services than if it chose to construct and own its network. Colorado Feb. 28 Ex Parte Letter at 2. Oregon Health
Network also explained that it successfully created its network by implementing a multi-vendor leased line network.
OHN Feb. 28 Ex Parte Letter at 1.
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Figure 10(a) – Pilot Funding Commitments for Self-Construction versus Third Party Services

(Millions)145
Funding Commitments
Attributable to
Construction of HCP-
Owned Networks,
$47.0 , 22%
Funding Commitments
Attributable to Third-
Party Services, $170.7
, 78%

Figure 10(b) – Breakdown of Pilot Funding Commitments for Construction Versus Services146

Funding Commitments Attributable to Construction of HCP-

Amount

Owned Networks

(Millions)
Infrastructure/Outside Plant (Engineering & Construction)
$35.2
Network Equipment (including Engineering & Installation)
$10.3
Network Mgmt/Maint/Operations (not captured elsewhere)
$1.5

Subtotal

$47.0

Funding Commitments Attributable to Third-Party Services

Leased/Tariffed Facilities or Services
$156.6
Network Design
$1.9
Network Equipment (including Engineering & Installation)
$9.0
Network Mgmt/Maint/Operations (not captured elsewhere)
$2.6
Internet 2/NLR/Internet
$0.6

Subtotal

$170.7

Total

$217.7
48. Although the majority of funding commitments have been for third-party services, Pilot
Projects, where necessary, have used construction funding to extend connectivity to over 400 health care
provider locations.147 For example, several projects have used Pilot Program funds to construct and own
last-mile connections to HCPs or to create parts of their network where there was no other competitive
option. St. Joseph’s Hospital states that it found constructing and owning part of its private fiber


145 USAC Aug. 2 Data Letter at 3-4 (providing funding commitments for construction and leased services as of Jan.
31, 2012).
146 Id.
147 USAC May 4 Data Letter at 3.
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network helped it control costs and ensure its long-term success.148 It states that purchasing the10 Gbps
connection it needed to move medical images would have been cost-prohibitive. Owning its own
facilities is less expensive, gives it more control of its network, and provides better quality and reliability
of service.149 At least one project indicates that the ability to construct facilities in the absence of a
suitable competitive bid may have had some constraining effect on prices bid for projects.150
49. The two projects that relied entirely on construction each received $9 million in funding
commitments for construction to connect, in total, approximately 94 health care providers.151 For
projects that are “partially constructed,” funding commitments for construction, on a per-project basis as
of January 30, 2012, ranged from $350,000 to $7 million.152 Very roughly, $35 million in construction
commitments to over 230 health care providers equates to approximately $150,000 per health care
provider.153 Assuming a life of 15 years for constructed facilities, this equates to an annualized cost of
about $2.3 million a year to the Fund to serve over 230 health care providers, or a cost of approximately
$830 per month per health care provider.154 By comparison, in funding year 2010, it cost on average
approximately $560 per month for the Primary Program to fund circuits in the 1.5 to 3 Mbps range.155
Thus, based on Pilot commitments as of January 31, 2012, it appears that the self-construction option, if
chosen and requested by Pilot Projects after competitive bidding, provides Pilot project health care
providers with higher-bandwidth services at only an incrementally higher cost to the fund (less than $1
million per year156) than the current Primary Program. Moreover, health care providers’ prices for the
higher bandwidth are generally comparable to, or less than, the prices for lower speed services currently
being ordered through the Primary Program, as further discussed below in Section III.G.
50. Equipment Purchase. Unlike the Primary Program, the Pilot Program provides support to
purchase equipment such as servers, routers, firewalls, switches, and other devices or equipment


148 Pilot Conference Call Mar. 26 Ex Parte Letter (WNYRAHEC et al) at 1.
149 Id.
150 HIEM Sept. 22 Ex Parte Letter at 2. See also Comments of Health Information Exchange of Montana, WC
Docket No. 02-60, at 10-11 (filed May 25, 2012) (HIEM May 25 Comments).
151 The two projects that have relied entirely on construction are Rural Nebraska Healthcare Network ($9.4 million)
and Northeast Ohio Regional Health Information Organization ($9.3 million). See USAC May 4 Data Letter at 3-4
and Appendix D; USAC June 27 Data Letter at 3 and Appendix A.
152 These projects include Health Information Exchange of Montana ($7.4 million), Illinois Rural HealthNet
Consortium ($2.8 million), Iowa Rural Health Telecommunications Program ($5.1 million), Michigan Public Health
Institute ($410,000), St. Joseph’s Hospital ($350,000), and West Virginia Telehealth Alliance ($465,000). See
USAC May 4 Data Letter at 3-4 and App. D; USAC June 27 Data Letter at 3 and App. A.
153 USAC estimates that of the eight Pilot projects that have used funds to construct and own parts of their networks,
230 health care providers have received funding commitments to fund construction. See USAC May 4 Data Letter at
3.
154 Note that these figures are estimates and do not account for inflation or other factors.
155 See infra Fig. 13(b).
156 Assuming that it costs $560 per month on average under the Primary Program to support a single health care
provider at the 1.5 to 3 Mbps level, the cost to serve 230 health care providers for 12 months would be $1.5456
million. When compared with the estimated annualized cost of $2.3 million a year to serve over 230 health care
providers in the Pilot Program using self-constructed facilities, the difference is approximately $0.76 million.
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necessary for the broadband connection.157 Commitments for network equipment in the Pilot Program
(including engineering and installation) were approximately $19.3 million for 698 health care providers
in 25 projects as of January 2012.158 In the Pilot Program, unlike in Primary Program, RHC support also
can be used to upgrade equipment and increase bandwidth. For example, if it is necessary for a Pilot
project to upgrade an existing HCP circuit, Pilot Program rules allow the project to receive funding for
both the higher bandwidth circuit and the equipment necessary to make it operational, whereas the
Primary Program would only provide funding for the higher bandwidth circuit.159 USAC notes that
because health care specialists are primarily located in urban areas, networks are typically designed in a
way that results in the urban center being the “hub” of the network.160 In order for the urban entity to act
as a “hub” for the network, equipment such as routers, firewalls, servers, and switches are necessary.
Because urban HCPs are natural hubs for telemedicine networks and were allowed to receive funding for
equipment, the Pilot Program effectively lowered the cost of creating health care broadband networks
with an urban center as the hub.161
51. IRUs and Prepaid Leases. The Pilot Program did not restrict the form of agreement that
health care providers could enter into with vendors for projects funded by the program.162 Some projects
have chosen to build their networks by purchasing indefeasible rights of use (IRUs) or long-term prepaid
leases, as shown below.163 A key benefit of such long-term arrangements is that they allow health care
providers to “scale up” bandwidth as their needs increase, as shown below. They also can yield lower
prices and can provide longer-term price stability for health care providers.164 These arrangements also
may provide vendors the incentive to deploy broadband connections where they do not exist, or to
upgrade current facilities to higher bandwidths.


157 2007 Pilot Program Selection Order, 22 FCC Rcd at 20397-98, para. 74. See also USAC Observations Letter at
6-7 (explaining that unlike Primary Program participants, Pilot Program participants could use RHC support to
purchase and upgrade their equipment if necessary).
158 USAC May 4 Data Letter at 3; USAC Aug. 2 Data Letter at 3-4.
159 See USAC Observations Letter at 6-7.
160 USAC Observations Letter at 5.
161 Id.; see also Section V.B. (discussing shortage of specialists in rural areas, and the importance of urban centers
for providing specialist care in the context of telemedicine).
162 See 2010 NPRM, 25 FCC Rcd at 9395, para. 55.
163 An IRU is an indefeasible right to use facilities for a certain period of time that is commensurate with the
remaining useful life of the asset, usually 20 years. The IRU confers on the grantee the vestiges of ownership, and is
customarily used in the communications industry. It usually requires a large upfront payment, generally priced as a
certain amount (depending on market rates) per mile or per fiber mile. 2010 NPRM, 25 FCC Rcd at 9395-96, para.
56. In comparison, a “prepaid lease” is simply a lease with a single large upfront payment, rather than regular
recurring payments.
164 See Pilot Conference Call Mar. 24 Ex Parte Letter (AEN et al.) at 1 (explaining that the Pilot project provided
economic incentive to bring broadband to the eastern shore of Virginia); USAC Observations Letter at 4.
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Figure 11 – Projects Using IRU/ Prepaid Leases165

Commitment

Type of IRU/

Maximum Bandwidths

Project

Amount

Lease

Term

Available

Health Information Exchange

$108,522.97
Prepaid Lease
2 years
100 Mbps to 1 Gbps
of Montana

Rural Western and Central

$615,468.01
IRU
10 years
45 Mbps, 100 Mbps, 1 Gbps

Maine Broadband Initiative

Iowa Rural Health

$1,240,789.10
IRU
20 years
1 Gbps

Telecommunications Program

Rural Nebraska Healthcare

$3,870,494.55
Prepaid Lease
15 years
100 Mbps, 1 Gbps

Network

Michigan Public Health

$5,517,313.92
IRU
20 years
1 Gbps

Institute

10 Mbps, 30 Mbps, 100

Iowa Health System

$6,833,296.95
IRU
15 years
Mbps

Illinois Rural HealthNet

10 to 20
$9,313,979.85
IRU
100 Mbps, 1 Gbps, 10 Gbps

Consortium

years

Southern Ohio Healthcare

$15,746,105.60
Prepaid Lease
20 years
5 Mbps to 1 Gbps

Network

Total

$43,245,970.95

G.

Bandwidth of Services Purchased

52. The National Broadband Plan estimated that the minimum bandwidth required to support
deployment of Health IT applications is 4 Mbps for single physician practices,166 10 Mbps for small
providers (2-5 physicians),167 25 Mbps for clinics and large physician practices (5-25 physicians), and
100 Mbps for hospitals.168 In addition, an August 2010 Commission staff analysis suggested that health
care providers need at least 10 Mbps to achieve full functionality of high-definition video conferencing
for health care purposes.169
53. The focus of the Pilot Program was to encourage health care providers to obtain access to
broadband connections. The data shows that HCPs do in fact use the Pilot funding to obtain high
bandwidth connections, with 80 percent purchasing connections above 3 Mbps and 69 percent
purchasing 10 Mbps or greater connections.170 In the Primary Program, by contrast, all
telecommunications services are supported, whether or not considered “broadband.”171 The vast
majority of connections in the Primary Program are relatively low bandwidth connections
(approximately 80 percent are 3 Mbps or less).172 Figure 12 below shows the bandwidth levels that


165 USAC Aug. 9 Data Letter at App. I.
166 We note that in certain rural areas, it is possible that rural health clinics and other small health care providers may
only have a single medical professional.
167 This category includes small primary care practices (2-4 physicians), nursing homes, and rural health centers (~5
physicians). See National Broadband Plan at 210-211.
168 See id. The National Broadband Plan also recommended that academic/large medical centers receive at least 1
Gbps to support the deployment of Health IT. See also OBI Health Care Technical Paper at 6.
169 OBI Health Care Technical Paper at 5; see also USAC Needs Assessment at 3.
170 See Fig. 12.
171 See 47 C.F.R. § 54.601(c).
172 See Fig. 13(a).
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health care providers in the Pilot Program were able to obtain for services purchased from third parties
(services with recurring charges).173 For purpose of comparison, Figure 12 shows the bandwidth levels
obtained by health care providers in the Primary Program in Funding Year 2010, the last year for which
full funding year information is available.174

Figure 12 – Pilot HCPs, By Bandwidth Tier175

700
600
500
400
300
# of HCPs
200
100
0 1.5 Mbps to 3 Mbps to 6 Mbps to 10 Mbps to 25 Mbps to 100 Mbps
less than 3 less than 6 less than
less than
less than
or more
Mbps
Mbps
10 Mbps
25 Mbps
100 Mbps
Urban
113
37
26
243
25
123
Rural
190
135
43
368
66
176


173 This figure does not include arrangements requiring large, up-front payments and a long-term commitment – i.e.,
prepaid leases and IRUs.
174 Funding Year 2010 covers the period from July 1, 2010 to June 30, 2011.
175 USAC Aug. 9 Data Letter at App. J.
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Figure 13(a) – Primary Program Circuits (minus Alaska) by Bandwidth Tier176

3500
3000
2500
2000
1500
# of Circuits
1000
500
0
1.5 Mbps to less 3 Mbps to less
6 Mbps to less
10 Mbps to less 25 Mbps to less
100 Mbps or
than 3 Mbps
than 6 Mbps
than 10 Mbps
than 25 Mbps
than 100 Mbps
more
# of Circuits
3203
171
41
276
203
131

Figure 13(b) – Primary Program (minus Alaska) Average Monthly Recurring Cost by

Bandwidth177

Average Recurring Cost per Month

Primary Program

HCP

# Of Circuits

Support

Contribution

Total Cost

1.5 Mbps to less
than 3 Mbps

3203
$564
$249
$813
3 Mbps to less
than 6 Mbps

171
$678
$504
$1,181
6 Mbps to less
than 10 Mbps

41
$1,686
$761
$2,447
10 Mbps to less
than 25 Mbps

276
$1,548
$629
$2,177
25 Mbps to less
than 100 Mbps

203
$3,414
$2,039
$5,453
100 Mbps or
more

131
$4,566
$1,505
$6,070
54. As shown in Figures 13(a) and 13(b), the vast majority of Primary Program participants (all
of which are rural by definition) obtain bandwidths in the T-1 (1.5 to less than 3 Mbps) range.178 As


176 USAC Aug. 9 Data Letter at App. K (explaining that the analysis includes only recurring services where the
applicant requested funding based on the urban/rural differential and that the analysis excludes voice services, multi-
billed circuits, and those circuits where funding was based on mileage).
177 Id.
178 Some participants may obtain multiple T-1 lines, depending on their bandwidth needs. This approach, however,
has several disadvantages. For example, there are no cost savings when “scaling up” because two T-1 lines
generally cost twice as much as one T-1 line. See NRHRC Dec. 27 Ex Parte Letter at 2. Furthermore, health care
providers who rely on multiple T-1 lines to use higher-bandwidth applications need each line to provide the requisite
level of service quality – if one line fails, the health care provider may not be able to use the application in a way
that provides high quality medical service. For example, if a remote diagnosis requires videoconferencing and
image transmission, and a health care provider uses a separate T-1 line for each application, then the diagnosis
cannot take place unless both T-1 lines function properly.
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shown in Figure 12, in contrast, only about a quarter of Pilot Program health care providers opted for
such lower-bandwidth lines; the remainder has received commitments for 3 Mbps or more, with nearly
60 percent of providers obtaining commitments for at least 10 Mbps. As these charts show, the average
bandwidth of rural HCPs participating in the Pilot Program is significantly higher than the bandwidth of
rural HCPs in the Primary Program.

Figure 14 – Bandwidths by HCP Type179

Teaching Hospital, Medical School, Post-Secondary Institution
Rural Health Clinic or Urban Equivalent
1.5 to less than 4 Mbps
Not-For-Profit Hospital / Dedicated ER of Rural, For-Profit
Hospital
4 to less than 10 Mbps
10 to less than 25 Mbps
Local Health Department or Agency
25 to less than 100 Mbps
100 Mbps or more
Community Mental Cealth Center
Community / Migrant Health Center
0
50
100
150
200
250
300
350
400
450
500
55. Figure 14 shows the bandwidths obtained by HCPs in the Pilot Program, according to the
bandwidth tiers suggested in the National Broadband Plan (4 Mbps for single physician practices, 10
Mbps for small providers, 25 Mbps for clinics and large physician practices, and 100 Mbps for
hospitals).180 As would be expected, hospitals tend to obtain more of the higher bandwidth connections,
though many clinics and health centers purchased 10 Mbps or more connections. Most health care
providers, with the exception of community/migrant health centers, receive more than 10 Mbps under
the Pilot Program and more than 70 percent of rural health care clinics receive bandwidth of at least 10
Mbps. Many not-for profit hospitals receive even faster speeds, with approximately 40 percent receiving
100 Mbps or more. The bandwidth recommended in the National Broadband Plan and in the OBI Report
for various types of health care practices matches up well with the bandwidth purchased by most health
care provider types in the Pilot Program.181
56. Finally, a key characteristic of many Pilot projects is the ability to offer their participating
health care providers a variety of speeds and the ability to easily reallocate or increase bandwidth, as
needed. For example, the North Carolina Telehealth Network (NCTN) provides a network throughout
55 North Carolina counties with a standard service of 10 Mbps for smaller subscribers (e.g., clinics) and
100 Mbps to 1 Gbps for larger subscribers (e.g., hospitals).182 Similarly, the Palmetto State Providers
Network provides a network throughout all 46 South Carolina countries with a standard service of 10
Mbps and a 1 Gbps shared backbone.183 The Iowa Rural Health Telecommunications Program provides
HCP-owned last mile connections to a local Internet access point for over 80 HCPs through Iowa, with


179 USAC Aug. 9 Data Letter at App. L.
180 See supra para. 52.
181 OBI Health Care Technical Paper at 6.
182 USAC Apr. 27 Site Visit Reports at 2.
183 USAC Mar. 16 Site Visit Reports at 9.
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bandwidth speeds varying from 30 Mbps to 60 Mbps depending on the needs of the local HCP.184
Pennsylvania Mountains Healthcare Resource Development provides speeds varying from 10 Mbps to
100 Mbps depending on the needs of the HCP.185

H.

Reduced Cost of High Bandwidth Connections

57. Not only has the Pilot Program increased the bandwidth obtained by participating health
care providers, it also has increased their broadband purchasing power. According to a 2010 survey
conducted by the Government Accountability Office, nearly all Pilot participants indicated that their
project would “definitely” or “probably” have entities that obtain telecommunications or Internet
services that would be unaffordable without the project.186 Projects have also reported to the
Commission that “many of their healthcare participants will be able to obtain higher bandwidth for costs
similar to what they were paying before the RHCPP.”187
58. Two key differences between the Pilot Program and the Primary Program are worth noting
with respect to this increase in purchasing power. First, the Pilot Program requires (and facilitates)
consortium applications. Many Pilot projects report significant cost savings simply on the basis of
achieving economies of scale within their consortia.188 For example, Frontier Access to Rural
Healthcare in Montana stated that its monthly recurring cost per site is “projected to be renegotiated at
twenty five percent less cost than the current negotiated contract.”189 The Michigan Public Health
Institute also reported achieving economies of scale, stating that its 72-site consortium has succeed in
driving down costs to the extent that the cost is now “less than what the [health care providers] are
currently paying for internet service.”190
59. Second, the discount rate structure under the Pilot Program may facilitate health care
providers’ selection of higher-bandwidth connections (in comparison to the Primary Program). To
receive a discount under the Primary Program, a rural HCP must ascertain a tariffed or publicly-available
rate for the desired service in an urban area within the state, and then receives a discount equal to the
difference between the urban rate and the rural rate.191 It can be difficult to find an equivalent urban rate
when the connection is greater than a T-1 (as higher bandwidth services are more likely to be subject to
individually negotiated rates), which may discourage some HCPs from applying for discounts for higher
bandwidth services altogether. Furthermore, the urban-rural differential (and thus the effective discount
rate) can be greater for a T-1 connection than for higher bandwidth connections, which could create
discentives to increase the broadband capacity of their connections under the Primary Program (e.g.,


184 Id. at 13.
185 Id. at 15.
186 GAO Report at 43 (55 of 57 respondents indicated that if they are able to accomplish their Pilot project goals,
their project “definitely” or “probably” will have entities that obtain telecommunications or Internet services that
would otherwise be unaffordable).
187 Quarterly Report of Indiana Telehealth Network, WC Docket No. 02-60, at 41 (filed Jan. 27, 2012).
188 See USAC May 30 Data Letter at 3 (projects that pursue a “one vendor” solution report to USAC that their ability
to negotiate price reductions improved because of the economies of scale introduced through bidding the entire
project at once).
189 Quarterly Report of Frontier Access to Rural Healthcare in Montana, WC Docket No. 02-60, at 12 (filed Jan. 12,
2012).
190 Quarterly Report of Michigan Public Health Institute, WC Docket No. 02-60, at 31 (filed Jan. 30, 2012).
191 See 47 C.F.R. § 54.605.
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from a T-1 to a 10 Mbps Ethernet connection), even if the jump in bandwidth could greatly increase their
ability to provide high quality health care.192 Neither of these factors is present in the Pilot Program,
which provides a uniform flat rate discount regardless of the bandwidth or service chosen.
60. Below, we provide more granular data on monthly recurring costs being paid for broadband
connections in the Pilot Program, broken out by bandwidth and type of health care provider. First,
Figure 15 below shows the average monthly cost for obtaining service in various bandwidth tiers
(divided further to show the monthly cost to the USF and to the HCP), as well as the number of HCPs
receiving services in each bandwidth tier.

Figure 15 – Pilot Project Average Monthly Recurring Cost By Connection Bandwidth

193

Average Recurring Cost Per Month

Bandwidth

# of HCPs

Pilot Program Support

HCP Contribution

Total Cost

1.5 Mbps to less than 3

Mbps

303
$661
$117
$778
3 Mbps to less than 6

Mbps

172
$993
$174
$1,167
6 Mbps to less than 10

Mbps

69
$1,565
$303
$1,868
10 Mbps to less than 25

Mbps

611
$1,498
$292
$1,789
25 Mbps to less than
100 Mbps
91
$1,828
$329
$2,157
100 Mbps or more
299
$1,669
$317
$1,986
61. A few trends shown in Figure 15 are worth noting:
·
1.5 to less than 3 Mbps. While this level of service is less than ideal from a health care
provider perspective,194 the data above suggests that the Pilot Program has made a minimum
level of connectivity available to even the smallest rural HCPs at an out of pocket cost of
about $120/month. The total recurring average monthly cost per connection is less in the
Pilot Program ($778) than in the Primary Program ($813).195
·
3 to less than 25 Mbps. Most HCPs are receiving services in this middle tier, which includes
the range of speeds recommended in the National Broadband Plan for all providers other
than hospitals.196 The cost to the Fund of supporting these services through the Pilot
Program, on average, is approximately $1,000 to $1,500 per provider per month, with the cost


192 See also NRHRC Dec. 27 Ex Parte Letter at 2 (observing that the incremental price steps of broadband, i.e., two
bonded T-1s cost twice as much as a single T-1 line, encourage rural health care providers to purchase the minimum
connectivity for their networks).
193 USAC Aug. 9 Data Letter at App. M.
194 The FCC Omnibus Broadband Initiative Technical Paper on health care recommended that health care providers
receive at least 4 Mbps. See OBI Technical Paper at 6.
195 See supra Fig. 13(b) and 15.
196 National Broadband Plan at 210-211.
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to the health care provider increasing to the $175 to $300 per month range.197 For example,
the Palmetto State Providers Network states that the 85 percent discount rate enables it to
provide HCPs on its network a package of 10 Mbps (5 Mbps broadband and 5 Mbps
symmetrical commodity Internet) and a shared 1 Gbps Internet2 circuit with VPN and video
bridge for approximately $210 per month, compared to the undiscounted rate of $400-600
that HCPs previously paid for just a T-1 (1.5 Mbps) line.198 Another project, according to
USAC, upgraded its 9.24 Mbps copper bonded T-1 service ($4,552.50 per month) with a 20
Mbps Ethernet service for a lesser cost ($3,920 per month).199
·
25 Mbps or greater service. On average, it appears that the cost to the Pilot Program for
higher-speed circuits is topping out at approximately $1,828 per month, and the cost to the
health care provider at about $329 per month.200 Pricing for higher-bandwidth circuits may
be influenced by two factors: (1) what health care providers can afford to, and are willing to,
pay as their contribution; and (2) the fact that the underlying costs to the service provider of
deploying fiber often are substantially the same regardless of whether a 10-25 Mbps
connection or 100 Mbps connection is ultimately provided over that fiber. As two projects
note, once a fiber connection is in place, HCPs can receive much more bandwidth for a much
smaller additional incremental cost.201 The Arizona Rural Community Health Information
Exchange (ARCHIE), for example, states that before the Pilot Program, the undiscounted
monthly Internet access bill for seven bonded T-1 lines (approximately 10 Mbps of
bandwidth) was almost $10,000.202 The Pilot funding enabled ARCHIE to purchase a DS-3
connection (approximately 45 Mbps of bandwidth) at $2,000 a month, effectively providing it
three times the capacity it previously had. Similarly, participation in the Pilot enabled the
Kentucky Behavioral Telehealth Network to pay nearly the same amount ($400-$500 a
month) for a thirty-fold increase in bandwidth (through a 45 Mbps connection) as it was
paying for a T-1 line.203 According to USAC, yet another project, through the use of a fiber
IRU, is able to provide 1 Gbps symmetrical service to fifty hospitals at an average cost of
$640 per month, per hospital, and will have unlimited flexibility in providing for the
broadband needs of its members in the future.204 This project, through an IRU with a
different provider, is also providing a 100 Mbps symmetrical service to a separate group of
rural HCPs at a cost of $1,300 per month. These rural HCPs previously paid $700 per month
for a T-1 (1.544 Mbps) connection.205


197 See supra Fig. 15 (average Pilot Program support is approximately $993 (3 to less than 6 Mbps), $1,565 (6 to less
than 10 Mbps), and $1,497 (10 to less than 25 Mbps); average HCP contribution is approximately $173 (3 to less
than 6 Mbps), $302 (6 to less than 10 Mbps), and $291 (10 to less than 25 Mbps)).
198 Pilot Conference Call Mar. 13 Ex Parte Letter (PMHA et al.) at 2.
199 USAC May 30 Data Letter at 4.
200 See supra Fig. 15 (average Pilot Program support is approximately $1,828 for 25 to less than 100 Mbps services,
and $1,669 for 100 Mbps or more; average HCP contribution is approximately $329 for 25 to less than 100 Mbps
services, and $317 for 100 Mbps or more).
201 Id.
202 Id.
203 Pilot Conference Call Mar. 16 Ex Parte Letter (ARCHIE et al.) at 1.
204 Id.
205 USAC May 30 Data Letter at 3-4.
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62. Finally, because a wide variety of HCP types are eligible for support under the Act, different
categories of HCPs will have different bandwidth needs and financial resources to pay for those needs.
As Figure 16 below shows, hospitals on average tend to pay the most for services, and rural health
clinics tend to pay the least.

Figure 16 – Pilot Projects Average Monthly Recurring Cost By HCP Type206

Average Recurring Cost Per Month

Pilot Program

HCP

Type of HCP

# of HCPs

Support

Contribution

Total Cost

Rural Health Clinic or Urban

Equivalent

392
$1,018
$181
$1,199

Local Health Department or

Agency

76
$1,056
$186
$1,242

Community Mental Health

Center

272
$1,257
$228
$1,485

Community / Migrant Health

Center

281
$1,394
$259
$1,653

Teaching Hospital, Medical

School, Post-Secondary

Institution

24
$1,467
$259
$1,725

Not-For-Profit Hospital /

Dedicated ER of Rural, For-

Profit Hospital

500
$1,955
$392
$2,347

IV.

IMPROVEMENTS IN QUALITY AND COST OF HEALTH CARE

63. The Pilot Program has helped participating health care providers create local, regional and
even state-wide health care networks, resulting in improved quality and lower costs of health care in
rural areas. For example, telemedicine is improving health care providers’ access to specialists, and
allowing rural providers to offer health care to patients that would otherwise have to travel great
distances to see medical specialists or forego care entirely. As pointed out by the National Rural Health
Resource Center, “telemedicine applications will be crucial in helping to address current and projected
shortages in primary care and rural physicians nationwide, as well as shortages of pharmacists in rural
areas.” 207 The broadband networks created through the Pilot Program also have enabled rural health


206 USAC Aug. 9 Data Letter at App. N.
207 NRHRC Dec. 27 Ex Parte Letter at 2. There are many factors other than the cost or availability of broadband
connectivity that affect the pace of adoption of telemedicine. These include lack of reimbursement for services,
state licensing requirements, credentialing requirements, lack of technical expertise, and the need for standards. See,
e.g., id
. 2 (noting that the “lack of reimbursement is the biggest obstacle to the deployment of telemedicine
services”); Bart M. Demaerschalk, Telemedicine or Telephone Consultation in Patients with Acute Stroke, Current
Neurology and Neuroscience Reports, Vol. 11: No. 1, 43 (2011) (noting that major barriers to telemedicine adoption
include inadequate reimbursement rates, licensing restrictions, lack of reliable internet connectivity, and poor
understanding of technology, among others); Rural Maryland Council, Final Report of the December 2010
Maryland Telehealth and Telemedicine Roundtable
(Jan. 2011), available at
http://www.rural.state.md.us/Roundtables/Telehealth_2010/THTM_Roundtable_FINAL_Jan2011.pdf (last visited
June 15, 2012) (concluding that four major barriers to telehealth implementation exist within Maryland: inadequate
funding and reimbursement, a lack of state coordination and oversight efforts, broadband limitations, and legal
impediments such as licensing); NRHA Dec. 21 Ex Parte Letter at 1 (“budget limitations and the shortage of
technology personnel” limit adoption of telemedicine in rural areas); NRHRC Dec. 27 Ex Parte Letter at 1 and
attachments (describing the shortage in health IT workforce in rural areas).
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care providers to reduce their often high travel expenses and patient transfer costs, as well as to realize
reductions in human resource and administrative expenses. Those networks also have facilitated the
sharing of technical and medical expertise and the training of health care personnel in remote areas.208
Additionally, some Pilot Program health care providers note that telemedicine and telehealth have
provided new opportunities to increase revenue. We discuss the impact of the Pilot Program on each of
these aspects of health care delivery below.

A.

Telehealth/Telemedicine Applications Enabled by the Pilot Program

64. Pilot projects have been able to deploy a wide range of telehealth and telemedicine
applications over their broadband networks. Using these networks, health care providers are able to
exchange electronic health records and use other health IT applications; transmit X-rays, MRI, and CT
scans and other medical images; and provide distance education, training, and consultation. As
discussed below, these applications improve the quality of health care delivered to patients in rural areas,
generate savings in the cost of providing this health care, and reduce the time and expense associated
with travel to distant locations to receive or provide care.
65. Pilot Projects have reported adoption of a wide variety of telemedicine and telehealth
applications, as summarized below in Figure 17. Because many of the Pilot projects are not yet fully
implemented, and because not all Pilot projects describe their telemedicine and telehealth activities in
their quarterly reports, the figure shows that a relatively small percentage of projects have implemented
each type of telehealth application to date. When all the Pilot projects are fully implemented, there is
likely to be an even wider adoption of telehealth and telemedicine applications over their networks. The
most commonly reported telemedicine applications include tele-psychiatry/tele-psychology, tele-
radiology, tele-echocardiology, and tele-stroke. The most commonly reported other telehealth
applications include medical training, electronic health records, and tele-pharmacy.

Figure 17 – Telemedicine/Telehealth Applications Reported by Pilot Projects209

Percentage of Pilot

Telemedicine/Telehealth Application

Count

Projects Using
Application

Tele-Psychology/Tele-Psychiatry
9
18%
Continuing medical education
8
16%
Electronic Health Records
7
14%
Tele-Radiology
7
14%
Tele-Echocardiology
6
12%
Tele-Stroke
5
10%
Tele-Pharmacy
4
8%
Tele-ICU
3
6%
Tele-Emergency or Tele-Trauma
3
6%
Tele-Maternal/Fetal Monitoring
3
6%
Tele-Pathology
3
6%
Tele-Infectious Diseases
2
4%
Tele-EEG
1
2%
Tele-Dermatology
1
2%
Other210
11
22%


208 See, e.g., NRHRC Ex Parte Letter at 1; USAC Mar. 16 Site Visit Reports at 11 (describing Palmetto State
Providers Network’s provision of remote training for medical personnel).
209 Based on staff review of Pilot participant 2011-2012 quarterly reports.
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66. Some specific examples of the telehealth and telemedicine applications currently being
deployed over Pilot-funded broadband networks include:
·
Palmetto State Providers Network (PSPN). As of June 2011, over 6,600 tele-psychiatry
consults have taken place over PSPN’s network, and PSPN conducts 100 tele-OB/GYN,
maternal, and fetal care visits per week.211 Expectant mothers can receive care from fetal
medicine specialists, genetic counselors, dietitians and other specialists through the PSPN
connection from anywhere in the country. 212
·
Geisinger Health System (Geisinger). Geisinger uses its network for numerous
telemedicine applications, such as tele-trauma, tele-stroke, tele-echo-cardiology, tele-
electroencephalograms (EEG), tele-ICU, tele-psychology, tele-radiology, tele-maternal
fetal monitoring and tele-pathology.213 In 2010, for example, 356 pediatric tele-echo, 432
tele-trauma, and 51 tele-stroke cases were handled through Geisinger’s network.214 The
HITECH Act has also led Geisinger to implement health information exchanges (HIEs)215
over its network.216
·
Heartland Unified Broadband Network (HUBNet). HUBNet provides three examples of
improvements facilitated by the Pilot Program. First, following the installation of its
HUBNet connection, Horizon Health Care, a consortium of rural clinics in South Dakota,
tripled its number of telehealth sessions from ten to thirty sessions per week.217 Second,
HUBNet reports that prior to the Pilot Program, its e-ICU program lacked sufficient
bandwidth for two-way video, and patients were reportedly uncomfortable being treated
(. . . continued from previous page)


210 Other telehealth applications, as reported by Pilot participants in their quarterly reports, include: orthopedics, ear
nose and throat, pediatrician care, general telehealth, neurology, nephrology, diabetes education, and wound care.
211 USAC Mar. 16 Site Visit Reports at 9; PSPN Mar. 27 Ex Parte Letter at 1.
212 USAC Mar. 16 Site Visit Reports at 10.
213 Id. at 4.
214 Id. at 3.
215 Health information exchange (HIE) refers to the process of reliable and interoperable electronic health-related
information sharing conducted in a manner that protects the confidentiality, privacy, and security of the information.
National Alliance for Health Information Technology, Report to the Office of the National Coordinator for Health
Information Technology on Defining Key Health Information Technology Terms
23 (Apr. 28, 2008), available at
http://healthit.hhs.gov/portal/server.pt/community/healthit_hhs_gov__reports/1239. The HITECH Act provided
grants to states and qualified State Designated Entities “to develop and advance mechanisms for information sharing
across the health care system.” U.S. Department of Health and Human Services, HITECH Priority Grants Program,
available at
http://www.hhs.gov/recovery/programs/hitech/stateinfoexch.html (last visited June 15, 2012).
216 USAC Mar. 16 Site Visit Reports at 3. Geisinger is the recipient of a Beacon Communities grant from the Office
of the National Coordinator for Health Information Technology of the Department of Health and Human Services to
develop a health information exchange over a five county area in northern Pennsylvania. Funded through the
HITECH Act, Beacon Recipients were selected “to build and strengthen their HIT infrastructure and exchange
capabilities to improve care coordination, increase the quality of care, and slow the growth of health care spending.”
U.S. Department of Health and Human Services, HHS Awards Affordable Care Act Funds To Improve Quality Of
Care And Electronic Reporting Capabilities In Beacon Communities (Sept. 12, 2011), available at
http://www.hhs.gov/news/press/2011pres/09/20110912b.html (last visited June 15, 2012).
217 USAC Mar. 16 Site Visit Reports at 8.
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by a remote physician with an audio-only feed.218 After implementation of the Pilot
Program, HUBNet’s e-ICU mobile unit with two-way video service is being used
frequently by providers and readily accepted by families.219 Third, the establishment of
tele-pharmacy programs at 27 participating sites has enabled the system to meet
Meaningful Use Stage One requirements under the HITECH Act.220
·
Oregon Health Network (OHN). OHN provides tele-stroke, tele-psychiatry, tele-
cardiology, tele-dermatology, radiology/PACS/image transfer, continued medical
education, and perinatal/Pediatric ICU/Neonatal ICU services over its network. It has 16
members that provide telehealth services to 30 members that receive telehealth
services.221
·
Other projects. Other quantitative measures of telemedicine provided over Pilot-funded
networks include: Pathways Community Behavioral Healthcare network (1,000
psychiatric telehealth services per month);222 Missouri Telehealth Network (4,000 clinical
telehealth encounters across 30 medical specialties in 2010); 223 and Southwest Alabama
Mental Health Consortium (508 hours of service to 714 individuals located in rural
Alabama between August 2011 and January 2012).224
·
Health Information Exchanges. Other projects have also begun developing HIEs over
their Pilot-funded networks. The Louisiana Department of Health and Hospitals (LA
DHH) Pilot Project, in partnership with the Louisiana Health Care Quality Forum, is
currently in the process of developing an HIE.225 Likewise, the Oregon Health Network
plans to serve as the “State’s identified HIE broadband infrastructure ‘highway,’” to
support the exchange of electronic health care records across the state.226 The North
Carolina Telehealth Network also states that a statewide Health Information Exchange is
under development in North Carolina, and HCPs will connect to it through PSPN when it
becomes operational.227 The Pennsylvania Mountains Healthcare Resource Development


218 Id.
219 Id.
220 Id. at 6-7.
221 OHN Feb. 28 Ex Parte Letter at 3. A PACS is a “picture archiving and communication system,” which is an
electronic information system for acquiring, sorting, displaying, and storing medical images. See Picture Archiving
and Communications Systems
, AM. MED. ASS’N, http://www.ama-assn.org/ama/pub/physician-resources/health-
information-technology/health-it-basics/pacs.page (last visited Aug. 8, 2012).
222 Quarterly Report of Pathways Community Behavioral Healthcare Quarterly Report, WC Docket No. 02-60, at 14
(filed Jan. 30, 2012).
223 Quarterly Report of Missouri Telehealth Network, WC Docket No. 02-60, at 5 (filed Jan. 31, 2012).
224 Quarterly Report of Southwest Alabama Mental Health Consortium, WC Docket No. 02-60, at 15 (filed Jan. 30,
2012). With the availability of video-conferencing equipment, Southwest Alabama Mental Health Consortium notes
that it provided psychiatric services to 575 clients in rural Alabama during the same time period. Id.
225 Quarterly Report of Louisiana Department of Health and Hospitals, WC Docket No. 02-60, at 4 (filed Oct. 28,
2011).
226 Quarterly Report of Oregon Health Network, WC Docket No. 02-60, at 11 (filed Jan. 31, 2012).
227 USAC Apr. 27 Site Visit Reports at 2.
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project reports that all its hospitals will be connecting to a local area and/or statewide
health information exchange.228

B.

Improved Quality and Efficiency of Health Care Delivery

67. Pilot Projects indicate that telemedicine applications provide increased access to specialty
services and emergency care, no matter where a patient may be located. This allows for better, faster
treatment for patients.229 One Pilot project reports that patients and families state that they can now get
care in the local, rural hospital that is comparable to the level in the closest urban hospital.230
Telemedicine can also shorten the length of a patient’s stay in the hospital. For example:
·
Tele-stroke. Geisinger states that its network provides tele-stroke services to neurology
consults for patients “within minutes, as opposed to hours.”231 Bacon County Hospital in
southeastern Georgia reported an instance when a young woman having a stroke had her
life saved because the local physicians were able to use their telemedicine connection to a
specialist in Savannah, and as a result were able to administer the clot-busting drug
TPA.232
·
Tele-psychiatry. An example of cost savings from telemedicine is the use of tele-
psychiatry in the emergency room setting. Rural hospitals might have no choice but to
admit a patient presenting psychiatric symptoms while waiting for a psychiatrist to visit
in person. A remote video consult with a psychiatrist could enable a rural hospital to
diagnose, treat, and discharge the patient rather than admitting the patient for days
without treatment. The Palmetto State Providers Network (PSPN) states that prior to the
adoption of its tele-psychiatry program, patients would wait days for a psychiatric
consult, during which time they would be held in the rural hospital’s emergency
department. After implementation, however, psychiatric consults are generally available
“at any time, with minimal wait.”233 PSPN also notes that all four metropolitan hospitals
serving South Carolina now have access to all patient psychiatry records via Electronic


228 USAC Mar. 16 Site Visit Reports at 15.
229 See, e.g., USAC Mar. 16 Site Visit Reports at 6 (benefits of E-emergency connection includes helping rural
medical professionals build relationships with urban counterparts; allowing rural doctor and nurses to focus entirely
on patient care, because urban staff assist in coordinating patient transport when needed; helping urban site to
provide better care to patients when they have to be transported because the patient’s condition has already been
assessed remotely; and allowing urban site to make arrangements in advance of a patient’s arrival where that patient
needs to see a specialist); NRHRC Dec. 27 Ex Parte Letter at 2 (stating that telemedicine applications will be
crucial to addressing current and projected shortages in primary care and rural physicians nationwide, and that
telehealth applications will become increasingly useful and necessary for delivering primary care in rural
communities); ONC Jan. 6 Ex Parte Letter at 1 (noting research that suggests that only roughly 30 percent of visits
require the physical presence of a doctor, and that the medical appropriateness of remote visits is becoming well-
established).
230 See, e.g., USAC Mar. 16 Site Visit Reports at 8.
231 Id. at 3.
232 USAC Apr. 27 Site Visit Reports at 4. See also ONC Jan. 17 Ex Parte Letter at 2 (explaining that when the
emergency room of a rural hospital is able to quickly transmit a CT scan of a patient’s head to a neurologist in an
urban hospital, the rural hospital can prevent permanent stroke damage by administering preventative medicine in a
timely fashion, but where only a T-1 connection is available, transmission of the CT scan could take 25 minutes, and
the delay could have serious consequences for the patient).
233 USAC Mar. 16 Site Visit Reports at 9.
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Medical Records (EMRs) over the PSPN, which has greatly enhanced the urban centers’
ability to provide treatment.234
·
Tele-OB/GYN. Prior to the adoption of tele-OB/GYN services through the PSPN
network, expectant mothers in some parts of South Carolina would have to travel up to
168 miles to see a doctor, according to a PSPN physician.235 PSPN also notes that patient
visit no-show rates are directly proportional to the price of gasoline and the distance to
see a physician.236 Thus, telemedicine means more high-risk expectant mothers in rural
areas are receiving care. Before the tele-OB/GYN program, a PSPN physician would
spend six hours a day driving to rural South Carolina to see each patient for only three
minutes.237 Now, through the use of telemedicine, the same physician is now able to
utilize the entire working day and spends an average of thirty minutes with each one.238
·
Tele-radiology. The enhanced broadband capabilities at Punxsutawney Hospital, a
Pennsylvania Mountains Healthcare Alliance (PMHA) participant, have reduced the
turnaround time on X-ray readings from 20 minutes to 7 minutes, allowing for more
timely clinical interventions where needed.239 The network has also eliminated the need
to manually create and deliver mammography DVDs at another PMHA hospital, reducing
what was once an “inordinate amount” of clinical time to two to three minutes.240
·
Electronic Intensive Care (e-ICU). HUBNet states that its e-ICU program, which allows
physicians to monitor vitals, pharmacy orders, and test results, has significantly reduced
the number of days, on average, that a patient stays in the intensive care unit.241
·
Public Health Monitoring. The North Carolina Telehealth Network, which focuses on
local public health as well as general acute care medicine, has connected public health
departments across North Carolina that are using the bandwidth for communicable
disease tracking, syndromic surveillance, and environmental health reporting.
Communicable disease tracking has allowed the turnaround time on a suspected outbreak
to go from 5 to 10 days to 24 to 48 hours.242
·
Electronic Health Records. The Sanford Health Collaboration and Communication
Channel notes that the Pilot Program allowed it to upgrade from T-1 connections to
Ethernet services, which then enabled the project to roll out EHRs. Having complete
EHRs enables this hospital, which has patients coming from as far as 150 miles away
from a number of entry points, to treat patients more efficiently and effectively.


234 Id.
235 Id. at 10.
236 Id.
237 Id.
238 Id.
239 Id. at 15.
240 Id.
241 Id. at 7.
242 USAC Apr. 27 Site Visit Reports at 2.
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Furthermore, as patients move from specialty to specialty, the patient outcomes are better
because all the patient information is centrally captured.243
68. An important benefit of the Pilot Program is that increases in bandwidth can improve the
quality of telemedicine encounters even where telemedicine programs already exist, which in turn
improves the quality of care and staff and patient acceptance of telemedicine. For example, the Jefferson
County Hospital in Iowa had Internet VPN connections and residential grade broadband, from multiple
service providers, before its Pilot-funded connection. Over the pre-Pilot connection, tele-radiology
services took a minimum of 30 to 40 minutes to send images for reading. The time to send images
caused significant delay in providing patient services (patient waits were 3-4 hours in length). This
hospital now receives a 30 Mbps connection through the Iowa Rural Health Telecommunications
Program (IRHTP) Pilot project network, which allows transmission of high-resolution images within 60
seconds (comparable to service in urban areas). Patient wait time is now only 30 minutes, and the
hospital reports that the number of misdiagnoses is down dramatically.244
69. Another example of the benefits of increased bandwidth is HUBNet’s E-emergency
telemedicine program. Prior to the Pilot Program, the audio and video components of this program were
frequently not synchronized, especially if more than one person was in the room. At times, the E-
emergency program had to be turned off and rebooted for the connection to work properly. HUBNet
reports that the increased bandwidth has dramatically improved the ability to provide quality care to
patients through the telemedicine program.245
70. USAC’s Pilot project site visit reports indicate that once telemedicine programs are
implemented and operational, nearly all physicians and patients report positive, high levels of acceptance
of telemedicine applications. One HUBNet hospital administrator reported that its staff is now “heavily
dependent on the connection” and that “increased bandwidth speed is the single best process change they
have done.”246 Another HUBNet hospital reports that tele-consult visits are “so popular within the
community that the patients are now the ones asking for tele-consults.”247 Many Pilot projects report
enhancement of physician satisfaction and collegial support due to telemedicine applications provided
over the Pilot-funded broadband networks.248 Physicians appreciate the ability to consult with other
colleagues, especially in remote areas. Geisinger notes that telemedicine has enhanced “physician
recruitment, retention, satisfaction, and collegial support,” noting that applications such as e-ICU allow
physicians to “practice in a rural setting knowing that specialized help [is] only seconds away.”249
Telemedicine also enables Pilot participants such as Northwest Alabama Mental Health Center to
“attract qualified health professionals due to [their] new tele-psychiatry services which reduces travel


243 Pilot Conference Call Mar. 26 Ex Parte Letter (WNYRAHEC et al.) at 1-2. See also USAC Mar. 16 Site Visit
Reports at 14 (stating that Henry County Health Center, part of the IRHTP, was one of the first HCPs in the country
to reach stage one meaningful use requirements, and that the health center uses the broadband connection for all of
its EMRs).
244 USAC Mar. 16 Site Visit Reports at 13-14.
245 Id. at 5.
246 Id. at 5, 8.
247 Id. at 8.
248 See, e.g., USAC Mar. 16 Site Visit Reports at 3, 4, 8, 11, 14, 15; USAC Apr. 27 Site Visit Reports at 2-3 .
249 USAC Mar. 16 Site Visit Reports at 3.
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time and increases the number of patient visits that can be made.”250 One Pilot project cites a study
showing that recruitment and retention of doctors and health professionals in rural areas can be
positively impacted by the use of telehealth.251
71. Finally, Pilot networks also offer training opportunities for medical personnel in rural areas.
For example, PSPN states that 25 continuing education courses were offered to 457 health care providers
within a 7-month period in 2011, and physician’s assistant students on rotation throughout the PSPN
sites were trained remotely during July and August 2011.252

C.

Cost Savings from Telemedicine/Telehealth Applications

1.

Reduced Transfer and Travel Costs

72. Telemedicine provides patients in rural areas the opportunity to be diagnosed and/or treated
in their own communities, and can provide significant savings by reducing patient transfer or physician,
patient, and/or family travel costs. As one project states, linking to urban centers and using telemedicine
“bends the cost curve.”253 Overall, ten Pilot participants report that telemedicine currently provides, or
in the future would likely provide, savings in the form of reduced travel costs.254 Examples of savings in
transfer and/or travel costs facilitated by the Pilot Program include the following:
·
Heartland Unified Broadband Network (HUBNet) estimates that over a thirty-month
period, eight hospitals in its network have saved a total of $1.2 million in transfer
expenses following the implementation of e-ICU services.255 This estimate did not
include the additional savings due to avoiding provision of care at the urban site, nor did
it take into account the revenue that otherwise would have been lost by the rural site, or
the savings by patients’ families, who avoided travel to urban locations.256 Other


250 Quarterly Report of Northwest Alabama Mental Health Center, WC Docket No. 02-60, at 7 (filed July 29, 2011);
see also USAC Apr. 27 Site Visit Reports at 3 (stating that telemedicine technology has had a positive impact on
Bacon County Hospital’s ability to recruit and retain physicians).
251 Quarterly Report of Missouri Telehealth Network, WC Docket No. 02-60, at 6 (filed Apr. 30, 2012) (citing
Duplantie, J., Gagnon, M., Fortin, J., & Landry, R. (2007), Telehealth and the recruitment and retention of
physicians in rural and remote regions: a Delphi study, Canadian Journal Of Rural Medicine, 12(1), 30-36).
252 USAC Mar. 16 Site Visit Reports at 11.
253 Pilot Conference Call Mar. 26 Ex Parte Letter (WNYRAHEC et al.) at 2-3.
254 Quarterly Report of Communicare, WC Docket No. 02-60, at 5 (filed Jan. 30, 2012); Quarterly Report of
Heartland Unified Broadband Network, WC Docket No. 02-60, at 56 (filed Jan. 30, 2012); Quarterly Report of
Missouri Telehealth Network, WC Docket No. 02-60, at 5 (filed Jan. 31, 2012); Quarterly Report of Northwest
Alabama Mental Health Center, WC Docket No. 02-60, at 6 (filed July 29, 2011); Quarterly Report of Pathways
Community Behavioral Healthcare, WC Docket No. 02-60, at 14 (filed Jan. 30, 2012); Quarterly Report of
Southwest Alabama Mental Health Consortium, WC Docket No. 02-60, at 9 (filed Jan. 30, 2012); Quarterly Report
of Southwest Telehealth Access Grid, WC Docket No. 02-60, at 14 (filed Jan. 27, 2012); USAC Mar. 16 Site Visit
Reports at 3 n.1 (regarding Geisinger Health System); USAC Mar. 16 Site Visit Reports at 11 (regarding Palmetto
State Providers Network); OHN Feb. 28 Ex Parte Letter at 4 (stating that one hour of air transfer costs
approximately $24,000).
255 USAC Mar. 16 Site Visit Reports at 7.
256 Id.
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participants, such as Geisinger and the Missouri Telehealth Network (MTN), also cite
reduced transfer costs as tangible benefits from telemedicine applications.257
·
HUBNet and MTN also cite to reduced patient travel as a sizable cost-saving measure
brought about by an increase in telemedicine and telehealth applications. MTN reports
that in 2009, its patients avoided 1,700 round trips from rural areas of Missouri to
specialist clinics in Columbia and Kirksville, saving 538,000 miles of travel and over
$293,000 in fuel costs alone.258 HUBNet relies on a study at Avera Milbank Hospital (a
Critical Access Hospital) demonstrating that, over the course of a year, telemedicine
allowed 67 patients to stay in their local community to receive treatment instead of
traveling 152 miles away to Sioux Falls.259
2.

Reduced Operating Costs and Increased Revenue Opportunities

73. Telemedicine and telehealth can also demonstrably reduce providers’ operating costs by
lowering the cost of delivering health care, minimizing human resource expenses, and reducing
administrative costs.260 The National Rural Health Resource Center explains that health IT can help
rural hospitals to provide care for rural residents in their communities for less cost, and notes that most
overtreatment, which accounts for one-third of national spending on health care, takes place in major
heath care centers rather than small rural hospitals.261 Several Pilot Program participants report lower
costs as a result of the program. For example:
·
PSPN reports that Emergency Department psychiatry treatment costs dropped from
$2,500 to $400 per patient, per day as a result of its tele-psychiatry program.262 As a
result, PSPN has realized $18 million dollars in Medicaid savings.263 Prior to the
adoption of its tele-psychiatry program, PSPN notes that patients could wait days for a
psychiatric consult, during which time the patient would be held in the rural hospital’s


257 Geisinger reports that its e-ICU program at Lewistown and Evangelical Hospital allows for reduced travel
expenses by avoiding $10,000 helicopter and two-to-three-hour ground transports to locations that provide more
specialized care. See USAC Mar. 16 Site Visit Reports at 3, n.1. MTN estimates that each transport from the
Marshall Habilitation Center (MHC), located in Marshall, Missouri, to the University of Missouri (UM), located in
Columbia, Missouri, costs MHC more than $500 per patient. Quarterly Report of Missouri Telehealth Network,
WC Docket No. 02-60, at 6 (filed Jan. 31, 2012).
258 MTN notes that the average savings per trip was $175.00. Id.
259 Quarterly Report of Missouri Telehealth Network, WC Docket No. 02-60, at 6 (filed Jan. 31, 2012).
260 See, e.g., Quarterly Report of Southwest Telehealth Access Grid, WC Docket No. 02-60, at 14 (filed Jan. 27,
2012) (stating that it anticipates reduced costs as result of “improved sharing of resources”); Quarterly Report of
Southwest Alabama Mental Health Consortium, WC Docket No. 02-60, at 10 (filed Jan. 27, 2012) (stating that the
use of electronic health records will bring “increased staff productivity”); Quarterly Report of Tennessee Telehealth
Network, WC Docket No. 02-60, at 11 (filed Jan. 31, 2012) (stating that it anticipates that increased savings will be
realized from administrative efficiencies, including the sharing of practice management, electronic health records,
and participating in a health information exchange across the network).
261 NRHRC Dec. 27 Ex Parte Letter at 2.
262 USAC Mar. 16 Site Visit Reports at 10.
263 PSPN Feb. 23 Ex Parte Letter at 1. See also PSPN Mar. 27 Ex Parte Letter at 1.
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emergency department.264 After implementation, however, fewer resources were devoted
to patients waiting for evaluations.265
·
The Adirondack Champlain Telemedicine Information Network (ACTION) anticipates
$9 million in future operating cost savings as a direct result of the provision of tele-
cardiology, tele-trauma, tele-mental health, tele-neurology, and tele-respiratory
services.266
·
One PMHRD hospital states that the transmission of clinical and financial information
over their network has reduced employee turnover because employees are now able to do
transcription work from home.267 Since the network was implemented, it notes that the
turnover rate for transcriptionists dropped from fifty to zero percent, saving the hospital
approximately $20,000 per full time employee.268 PMHRD also states that the network
has enabled the development of a revenue cycle management program that has the
potential to increase an HCP’s bottom line by 2-3 percent, as well as reduced operating
costs.269
·
The Northwest Alabama Mental Health Center reported that it foresees savings as a result
of “reduced intercompany long distance phone calls, number of telephone lines, [and]
travel incurred by staff psychiatrists.”270
·
The Satilla Regional Medical Center in Georgia, through its e-ICU program, has been
able to reduce patient lengths of stay and ventilator treatment days with no denigration of
care and with substantial cost savings to the Medical Center.271
74. Telemedicine applications have also created opportunities for increased revenue streams for
rural Pilot participants. By keeping patients in rural hospitals, and by continuing to serve patients in
rural clinics, telemedicine can provide rural HCPs with opportunities to retain or increase their
revenues.272 Most rural HCPs operate on a very thin margin, and many operate at a loss.273 For rural
HCPs, broadband connections mean they can use telemedicine to retain patients and consult with
specialists remotely, “Which is better for patients and helps rural hospitals financially.”274 For example,


264 USAC Mar. 16 Site Visit Reports at 10.
265 Id.
266 Quarterly Report of Adirondack Champlain Telemedicine Information Network, WC Docket No. 02-60, at 5
(filed Jan. 20, 2012).
267 USAC Mar. 16 Site Visit Reports at 15.
268 Id.
269 Id.
270 Quarterly Report of Northwest Alabama Mental Health Center, WC Docket No. 02-60, at 6 (filed July 29, 2011).
271 USAC Apr. 27 Site Visit Reports at 3.
272 ORHP Apr. 10 Ex Parte Letter at 2. See also NRHRC Dec. 27 Ex Parte Letter at 2 (“Having more patients
receive care locally…helps rural hospitals to be successful.”); USAC Mar. 16 Site Visit Reports at 2.
273 See NRHA Dec. 21 Ex Parte Letter at 1; NRHRC Dec. 27 Ex Parte Letter at 2 (many critical access hospitals and
other small rural hospitals “are experiencing negative margins and facing increasing difficulties in accessing
capital”). See also USAC Mar. 16 Site Visit Reports at 14 (Jefferson County Hospital in Iowa reports that it can
keep more patients in the local hospital because of the quick send and read of the radiology scans).
274 See Pilot Conference Call Mar. 16 Ex Parte Letter at 1-2 (ARCHIE et al.) at 1-2. See generally NRHRC Dec. 27
Ex Parte Letter at 2 (discussing how telemedicine allows rural hospitals to treat patients locally); see also ORHP
(continued . . .)
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in the HUBNet Avera Milbank Hospital study, the use of telemedicine enabled a rural critical access
hospital to provide $24,456 in services locally that would otherwise have been provided elsewhere,
including specialist order services such as bone scans, ultrasounds, x-rays, CT studies, and various lab
tests.275 PMHA states that its network has enabled the development of a revenue cycle management
program with the potential to increase a rural provider’s revenue stream by two to three percent, as well
as reduce operating costs.276 Finally, broadband connections can be used to address shortages of health
IT personnel in rural areas by facilitating training via video conference.277
75. In addition to those projects that have already started to realize increased revenues as a result
of their broadband networks, Pilot projects whose networks are not yet operational anticipate that
telemedicine applications will increase their revenue. The North Country Telemedicine Project (NCTP)
predicts that telemedicine capabilities will enhance local inpatient hospital revenue by nearly $4.1
million due to increased retention of patients across five specialties – general surgery, cardiology,
gastroenterology, oncology, and pulmonology.278 Currently, patients from these specialties represent
more than 20 percent of cases that are transferred from local NCTP health care centers to urban
hospitals.279 Likewise, St. Joseph’s Hospital projects that initial telehealth services for ER, ICU and
behavioral health will generate $25,000 in revenue each year.280 In total, 15 Pilot sites noted in their
quarterly reports that they plan to rely on revenue from telemedicine services to offset future network
costs, with many emphasizing tele-behavioral health services in particular, due to Medicare and
Medicaid reimbursement polices.281 The Kentucky Behavioral Telehealth Network Sustainability Report
(. . . continued from previous page)


Apr. 10 Ex Parte Letter at 2 (explaining that rural hospitals are reimbursed a facility fee when they seek service
from a physician at an urban location via telemedicine).
275 Quarterly Report of Heartland Unified Broadband Network, WC Docket No. 02-60, at 56 (filed Jan. 30, 2012).
276 USAC Mar. 16 Site Visit Reports at 15.
277 See, e.g., NRHRC Dec. 27 Ex Parte Letter at 1 (vendors are conducting much of the training for implementation
of electronic health record systems via video conference, due to the shortage in health IT workforce).
278 Quarterly Report of North Country Telemedicine Project, WC Docket No. 02-60, at 29 (filed Jan. 30, 2012).
279 Id.
280 Quarterly Report of St. Joseph Hospital, WC Docket No. 02-60, at 8 (filed Jan. 20, 2012).
281 Quarterly Report of Adirondack Champlain Telemedicine Information Network, WC Docket No. 02-60, at 18
(filed Jan. 20, 2012); Quarterly Report of Frontier Access to Rural Healthcare in Montana, WC Docket No. 02-60, at
11 (filed Jan. 12, 2012); Quarterly Report of Geisinger Health System, WC Docket No. 02-60, at 3 (filed Jan. 25,
2012); Quarterly Report of Heartland Unified Broadband Network, WC Docket No. 02-60, at 56 (filed Jan. 30,
2012); Quarterly Report of Kentucky Behavioral Telehealth Network, WC Docket No. 02-60, at 29 (filed Jan. 30,
2012); Quarterly Report of North Country Telemedicine Project, WC Docket No. 02-60, at 27 (filed Jan. 30, 2012);
Quarterly Report of Northeast HealthNet, WC Docket No. 02-60, at 12 (filed Dec. 31, 2011); Quarterly Report of
Northwest Alabama Mental Health Center, WC Docket No. 02-60, at 6 (filed July 29, 2011); Quarterly Report of
Northwestern Pennsylvania Telemedicine Initiative, WC Docket No. 02-60, at 6, 9 (filed Jan. 25, 2012); Quarterly
Report of Pacific Broadband Telehealth Demonstration Project, WC Docket No. 02-60, at 10 (filed Oct. 25, 2011);
Quarterly Report of Pathways Community Behavioral Healthcare, WC Docket No. 02-60, at 14 (filed Jan. 30,
2012); Quarterly Report of Pennsylvania Mountains Healthcare Alliance, WC Docket No. 02-60, at 14 (filed Feb. 6,
2012); Quarterly Report of Southwest Telehealth Access Grid, WC Docket No. 02-60, at 13 (filed Jan. 27, 2012);
Quarterly Report of St. Joseph’s Hospital, WC Docket No. 02-60, at 8 (filed Jan. 20, 2012); Quarterly Report of
Tennessee Telehealth Network, WC Docket No. 02-60, at 11 (filed Jan. 31, 2012); see also Centers for Medicare
and Medicaid Services, Rural Health Fact Sheet Series: Telehealth Services (February 2012),
http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-
MLN/MLNProducts/downloads/TelehealthSrvcsfctsht.pdf; Center for Telehealth e-Health Law, 50 State Survey on
Medicaid Telehealth and Telehomecare Policies (Parts 1-3)
(February 2011), available at
http://ctel.org/expertise/reimbursement/medicaid-reimbursement/.
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specifically noted that Kentucky state law mandates Medicaid reimbursement of tele-behavioral health
services at the same rate as face-to-face services.282 Likewise, the Northwest Alabama Mental Health
Center and Pathways Community Behavioral Healthcare notes that it anticipates opportunities for
increased psychiatric billing.283 Other alternative revenue streams reported by Pilot participants also
include marketing agreements with Health IT product vendors284 and leasing of excess capacity on
constructed fiber lines.285

V.

KEY OBSERVATIONS

76. As part of this evaluation, Commission staff sought input from Pilot Program participants
and from USAC about their experiences with the Pilot Program. According to many Pilot participants,
the key features of the Pilot Program were the consortium approach, the inclusion of urban providers, the
broad definition of eligible expenses, the use of multi-year commitments (e.g., IRUs and long-term
prepaid leases), the use of a flat-rate discount approach, and the size of the discount. In its role as
Administrator, USAC also provided valuable insights about its experience with the Pilot Program and its
benefits.286 Some of the projects also identified several challenges, including the exclusion of
administrative expenses and the difficulty of predicting the long-term sustainability of the Pilot projects.
We discuss various key observations below.

A.

Use of Consortia

77. To facilitate the funding of broadband health care provider networks, the Commission
required HCPs to apply to the Pilot Program as consortia.287 The consortium application approach
proved to have many benefits both for the Pilot projects and for USAC as the program administrator. It
has simplified the application process for HCPs and USAC, resulted in significant cost savings for
participants, and contributed to administrative efficiencies.288 As a representative of the National Rural
Health Association put it, “permitting providers to apply for support as part of a consortium application
would be of great help, especially for smaller providers such as rural health clinics, which have few
administrative resources and for whom turn over in administrative personnel can pose a problem.”289
78. Simplicity of Application Process. Applying as a consortium is simpler, cheaper, and more
efficient for the health care providers than the Primary Program application process, which requires a
separate application for each HCP each year.290 In the Pilot Program, projects are required to file just a


282 Quarterly Report of Kentucky Behavioral Telehealth Network, WC Docket No. 02-60, at 29 (filed Jan. 27, 2012).
283 Quarterly Report of Northwest Alabama Mental Health Center, WC Docket No. 02-60, at 6 (filed July 29, 2011).
284 Quarterly Report of Colorado Health Care Connections, WC Docket No. 02-60, at 11 (filed Jan. 27, 2012);
Quarterly Report of Rocky Mountain Health Net, WC Docket No. 02-60, at 10 (filed Jan. 27, 2012).
285 Quarterly Report of Erlanger, WC Docket No. 02-60, at 13 (filed Jan. 30, 2012); Quarterly Report of Rural
Nebraska Healthcare Network, WC Docket No. 02-60, at 8 (filed Jan. 26, 2012); Quarterly Report of Health
Information Exchange of Montana, WC Docket No. 02-60, at 10 (filed Jan. 24, 2012).
286 See, e.g., USAC Observations Letter; USAC Mar. 16 and Apr. 27 Site Visit Reports; USAC Needs Assessment.
287 2006 Pilot Program Order, 21 FCC Rcd at 11111-12, 11116-17, paras. 1, 3, 16-17.
288 See generally USAC Observations Letter at 2-4.
289 NRHA Dec. 21 Ex Parte Letter at 1; see also NRHRC Dec. 27 Ex Parte Letter at 2.
290 See generally USAC Observations Letter at 2-3; Pilot Conference Call Mar. 26 Ex Parte Letter (WNYRAHEC et
al.
) at 4 (noting view of six Pilot projects that the consortium-based approach in the Pilot Program is much easier
than the process in the Primary Program).
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single Form 465 and 466 that includes information on the individual HCP sites in their network.291
Some Pilot projects have hundreds of sites, but still file only one application. In contrast, even though
the Primary Program permits consortium applications, that program requires a separate application for
each consortium-member HCP site, and requires HCPs to file those applications annually.292 For rural
HCPs considering participation in the Primary Program, the administrative cost of filing a separate
application sometimes can outweigh the benefit of the anticipated discount.293 Also, smaller HCPs often
lack the administrative resources and technical expertise to participate.294 High levels of administrative
staff turnover at rural HCPs can present a further challenge, especially if applications have to be
resubmitted annually.295
79. As noted below, the use of a flat-rate discount applicable to all eligible expenses in the Pilot
Program is administratively simpler for applicants and for USAC, and makes it easier to pursue
consortium applications with many HCP sites. The flat discount also makes it easier for each HCP to
determine the level of funding it would receive and thus to evaluate whether it is worth participating in
the program, compared with determining the urban/rural discount that would be available in the Primary
Program.296 Some HCPs also recognize that the ability to bill service providers as a consortium in the
Pilot Program is helpful.297
80. Advantages for USAC Application Review Process. The use of consortium applications in
the Pilot Program has also enabled USAC to review applications with many individual sites at once and
to make determinations regarding those applications in a more efficient, consolidated fashion.298 For
example, because they operate as consortia, Pilot projects are required to obtain Letters of Agency
(LOA) from participating HCPs in their networks, which has helped USAC determine participant
eligibility.299 Additionally, because consortium applicants have a centralized approach to the application
and network design process, they are able to respond more efficiently to USAC throughout the
application process.300 Finally, the consortium application process provides USAC the ability to


291 2007 Pilot Program Selection Order, 22 FCC Rcd at 20405, 20407, paras. 86, 89.
292 See 47 C.F.R. §§ 54.603(b), 54.623(d); USAC Observations Letter at 2.
293 See NRHA Dec. 21 Ex Parte Letter at 1 (noting that some health care providers do not complete the application
process because of uncertainty about how much of a discount they will receive).
294 See id. at 1; Pilot Conference Call Mar. 13 Ex Parte Letter (PMHA et al.) at 3 (noting view of five Pilot projects
that a reformed RHC program should provide opportunities for networks to file as consortia, which takes the
administrative burden off of small HCPs that do not have the time or personnel to apply for funds through the RHC
program, and that the ability to bill service providers as a consortium in the Pilot Program was very helpful); PSPN
Feb. 23 Ex Parte Letter at 2 (stating individual health care providers often do not have the capacity to negotiate
RHC processes and that the ability to bill as a consortium is more efficient than requiring hundreds of members to
submit invoices each month); NCTN Apr. 9 Ex Parte Letter at 2 (stating that the NCTN’s formation of a consortium
has been very successful, by lowering administrative costs, improving appropriate uptake of services, improving
completion, improving operations, and providing a nexus for supporting broadband-related health projects in North
Carolina; and strongly encouraging the Commission to support such consortia in a reformed RHC program).
295 See NRHA Dec. 21 Ex Parte Letter at 1; NRHRC Dec. 27 Ex Parte Letter at 2.
296 See infra Section V.H.
297 Pilot Conference Call Mar. 13 Ex Parte Letter (PMHA et al.) at 3; PSPN Feb. 23 Ex Parte Letter at 2.
298 USAC Observations Letter at 2-4.
299 Id. at 3.
300 See id. at 2-4.
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substitute HCPs and services in the networks more efficiently. USAC explains that because HCP
circuits in the Pilot Program are funded at the consortium level, it can substitute or modify the site or
service without modifying the actual commitment level.301 This is more efficient than the Primary
Program, in which any modification of funding requires a new application and a new funding
commitment letter for each HCP impacted.302
81. Lower Rates, Higher Bandwidth, and Better Service Quality. The consortium bulk buying
capability of multiple HCPs, combined with the RFP and competitive bidding process, has enabled many
Pilot projects to obtain lower rates for services and to realize other purchasing efficiencies.303 Applicants
for rural health care support must select the most cost effective vendor through a competitive bidding
process. In the Primary Program, USAC estimates that bids are received for services representing only
16 percent of funding requests; the remainder do not receive competitive bids after posting for such
bids.304 The consortium approach in the Pilot Program, however, appears to have made the competitive
bidding process more fruitful, as 24 projects had 6 or more vendors bid on some component of the
project, and 14 had more than ten vendors bid.305 Furthermore, all but 3 projects had more than a single
vendor bid.306 Through this process, over 120 vendors have been selected to provide services to the Pilot
Projects. A list of winning vendors is attached as Appendix D and includes large communications
providers; small, rural local exchange providers; cable operators; municipal electric utilities;
construction companies; and systems integrators.
82. Some of the communications service providers bidding on the RFPs also may be more
willing to offer Pilot projects larger discounts because the Pilot projects have multiple sites and present a
more appealing commercial proposition to the service providers.307 Also, when one or more large health
care providers is a part of the project (typically those providers are located in urban areas), vendors may
be more interested in bidding on the projects and in offering competitive rates to all the sites, as a way to
attract the business of the larger HCPs.308 In addition, because a single RFP includes all HCP sites (both
those that have broadband available to them and those that do not), vendors often must bid on providing


301 Id. at 3-4.
302 Id. at 4.
303 Colorado Telehealth Network and others note that operating as consortia has provided them greater purchasing
(i.e. bulk-buying) power, which has allowed them to negotiate lower pricing with their service provider. Colorado
Feb. 28 Ex Parte Letter at 1 (stating that financial benefits have accrued to member HCPs from the joint purchasing
power that led to a cost-effective contract with the communications service provider); see also OHN Feb. 28 Ex
Parte
Letter at 1 (stating that OHN’s multi-vendor leased line network framework helped utilize the existing state
fiber infrastructure while creating the highest level of competition possible, allowing smaller local service providers
to compete directly and fairly with larger providers, which subsequently resulted in OHN’s members receiving the
most competitive bids (reduced costs) possible); Pilot Conference Call Mar. 13 Ex Parte Letter (PMHA et al.) at 2
(stating that the benefits of pilot funding include the ability to obtain Internet services as a group); Pilot Conference
Call Mar. 26 Ex Parte Letter (WNYRAHEC et al.) at 2 (WNYRAHEC stating that it has experienced a great deal of
cost savings from being on a shared network).
304 USAC May 30 Data Letter at 2. If no bids are received in response to a Form 465 request for services, a health
care provider may then contact its local service provider and enter into a contract. Id. at 1.
305 USAC May 30 Data Letter at 2.
306 Id.
307 See USAC Aug. 2 Data Letter at 4; see also USAC Observations Letter at 1-2 (use of centralized contracting and
invoicing; use of Master Services Agreements).
308 See, e.g., UVA June 8 Ex Parte Letter at 2.
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broadband connections to sites where broadband might not already be available.309 For the majority of
Pilot projects, the competitive bidding process itself also has been successful in attracting multiple bids
from a range of different service providers.310
83. In addition to attracting lower rates, the consortium-based competitive bidding process has
produced other purchasing efficiencies. The project-wide RFP and competitive bidding process often
requires vendors to work with a number of underlying communications service providers, and to
assemble offerings from a number of sources, in order to provide service as requested in the RFP.311
This reduces the burden on Pilot projects, as they do not have to negotiate and contract with a number of
different service providers to create their networks.312 Also, vendors bidding on the projects are
responsible for ensuring that necessary service quality, reliability, and interoperability requirements
specified in the RFP are fulfilled.313 As a result, bulk buying and competitive bidding, and the
consortium contract negotiations, appear to enhance the ability of rural HCPs to obtain not just higher
bandwidth connections than otherwise, but also to secure better service quality and reliability guarantees
from service providers.314 Finally, the provision of multi-year funding under the Pilot Program (and the
permissibility of multi-year contracts and prepaid leases) may encourage term discounts and may
produce lower rates from vendors.315
84. Cost Savings through Centralization and Sharing of Administrative Expenses. Under the
consortium approach, the expenses associated with planning the network, applying for funding, issuing
RFPs, contracting with service providers, and invoicing are shared among a number of providers. The
Pilot Program consortium application process encourages projects to centralize their implementation
efforts and spread their administrative costs over all the health care providers in their network, which
results in cost savings to the participants.316 Pilot projects were required to apply as a network and to
centralize their leadership by designating a project leader and project coordinators, which could be an
eligible HCP or an entity responsible for handling the application process on behalf of eligible HCPs.317
Centralizing the application and implementation process in this way has produced significant economies
of scale and administrative cost savings for many of the Pilot projects.318 Pilot project leaders took on
the administrative tasks associated with applying for funding so that individual HCPs did not need to use
their scarce administrative resources for this purpose.319 The centralized structure also has reduced Pilot
projects’ need for consultants (as compared with the many Primary Program participants who often do


309 See USAC Aug 2. Data Letter at 4.
310 USAC May 30 Data Letter at 1-2. See infra Section V.A.
311 See Aug. 4 Data Letter at 4.
312 See id.; see also USAC May 30 Data Letter at 3.
313 See Aug. 4 Data Letter at 4.
314 See id.
315 See USAC Observations Letter at 4.
316 See USAC Observations Letter at 1-3.
317 See 2006 Pilot Program Order, 21 FCC Rcd at 11111, 11116-17, paras. 3, 16-17.
318 USAC Observations Letter at 1; PSPN Mar. 27 Ex Parte Letter at 2 (explaining that “individual members,
especially in rural locations, often do not have the resources or time to navigate the RHC Primary Program process
and it would be unimaginable that the RHC would want to receive literally hundreds of invoices per month from one
local network, when the ability to bill as a consortium would be more efficient”); Cabarrus Health Alliance et al.
Comments at 2.
319 USAC Observations Letter at 1-2.
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rely on consultants). In contrast, administrative costs have been higher for those projects that have
chosen to decentralize the approach to contracting and invoicing.320
85. Continuation of Institutional Knowledge. Rural HCPs also commonly experience high staff
turnover, so that the expertise in the application process is lost when staff departs.321 Because a
consortium approach encourages administrative resources and expertise to be centralized and shared,
institutional knowledge is less likely to be lost through staff turnover.322
86. Project Leadership and Contribution of Resources by Large Health Care Entities. The
consortium approach also enables rural HCPs to draw on the expertise and leadership of large health care
entities, which often were the project leaders and the primary sources of technical and administrative
expertise.323 Project leaders typically are universities, state entities, hospitals, medical associations, or
nonprofits with the mission of advancing telehealth and telemedicine initiatives.324 These leaders often
have the technical expertise and resources necessary to take advantage of Pilot project support and to
facilitate the organization of groups of health care providers who could benefit from being part of a
broadband network.325 These leaders are also more likely to have access to the sophisticated information
technology and other technical expertise necessary for network design, drafting of RFPs, integration of
the networks with existing and planned telehealth applications, and training other sites.326 This level of
expertise is less often found in rural hospitals or clinics, so access to these resources within the larger
health care network membership can be invaluable.327 Additionally, large, usually urban, entities are
more likely to have the necessary financial and administrative resources to pursue applications, given
that the Pilot Program did not cover administrative expenses (see Section V.E below).328
87. Improved Access to Health Care for Rural Patients Through Telemedicine and Health IT.
As discussed in detail above and below in Section V.B, rural health care providers that are part of a
consortium benefit from being linked with larger HCPs, especially those in urban areas. Those linkages
enable rural HCPs to access specialists through telemedicine and employ other telehealth applications,
and thus to provide higher quality health care at lower cost. The involvement of physicians and other
health care or health IT professionals in Pilot projects also helps projects to get off the ground quickly


320 Id. at 2.
321 NRHA Dec. 21 Ex Parte Letter at 1; NRHRC Dec. 27 Ex Parte Letter.
322 See USAC Observations Letter at 1-3.
323 Pilot Conference Call Mar. 13 Ex Parte Letter (PMHA et al.) at 2; USAC Observations Letter at 5.
324 USAC Observations Letter at 1.
325 Pilot Conference Call Mar. 13 Ex Parte Letter (PMHA et al.) at 3; USAC Observations Letter at 1; OHN Feb. 28
Ex Parte Letter at 7.
326 USAC Observations Letter at 5.
327 NRHA Dec. 21 Ex Parte Letter at 1 (discussing the difficulty that rural health care providers have in
understanding their overall broadband needs, and further noting that IT budgets for rural hospitals and other rural
health care providers are usually less than IT budgets for hospitals nationwide, which in turn are typically one-half
to one-fourth of those in other industries); OHN Feb. 28 Ex Parte Letter at 7 (noting that many health care
institutions in Oregon do not have a knowledgeable IT staff to support them in all phases of selection, installation,
and use of broadband connections); John Gale Mar. 29 Ex Parte Letter at 2 (stating that informal networks to pool
resources and technical expertise in order to support the implementation of electronic medical records were largely
occurring among hospitals, not rural health clinics, but that rural health clinics could be affiliated with such
hospitals).
328 See 2006 Pilot Program Order, 21 FCC Rcd at 11115-16, paras. 14-15.
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and to secure funding.329 Health care professionals (particularly physicians) can play an important role
in convincing others to invest in broadband and create broadband networks as a means to foster the use
of telehealth applications – including telemedicine, electronic medical records, exchange of medical
information, and training.330 For example, Western New York Rural Health Education Center found that
its Chief Information Officers and medical leadership were the champions of its network.331 In some
cases, the Pilot projects are being led by health care professionals who were using telemedicine or health
information technology before becoming involved in the Pilot, and thus can show how broadband
networks supported by the Pilot Program can be used to extend the benefits of their programs to smaller
hospitals and clinics in rural areas.332

B.

Inclusion of Urban Providers

88.
The Pilot projects benefited significantly from the inclusion of urban HCPs in their
networks. Unlike the Primary Program, the Commission permitted applicants to include public and not-
for-profit urban locations in the Pilot projects, as long as the rural HCPs represented more than a de
minimis
number of the HCPs in the network.333 As of January 31, 2012, all but 6 of the 50 active projects
included at least one urban HCP.334 The urban sites represented approximately 35 percent of the 2,107
Pilot project sites and approximately 35 percent of the funding commitments for all projects as of January
2012.335 As noted above, the percentage of funds allocated to urban sites likely overstates the support
flowing to urban sites in the Pilot Program because 100 percent of some shared expenses are attributed to
urban locations, even though those expenses benefit the entire network.336
89. Participation of urban sites in the Pilot Program provides many benefits for the Pilot
projects. According to a number of Pilot projects, participation by urban sites has been instrumental to


329 USAC Observations Letter at 2; Pilot Conference Call Mar. 26 Ex Parte Letter (AEN et al.) at 1; Colorado Feb.
28 Ex Parte Letter at 1.
330 USAC Mar. 16 Site Visit Reports at 2, 6. See also Pilot Conference Call Mar. 16 Ex Parte Letter (ARCHIE et
al.
) at 1-2 (noting that physician involvement is key to broad telemedicine adoption); Telehealth Resource Center,
Operation Tools: How Should Telemedicine be Introduced to Local Physicians?, available at
http://www.telehealthresourcecenter.org/toolbox-module/introducing-telemedicine-services-community#how-can-
the-local-providers-be-informed-of-the-ava (last visited June 15, 2012) (finding that a referring physician may be
“skeptical of the value of telemedicine due to the concern about the potential loss of the doctor-patient relationship
that is fostered in face-to-face care”); Lawrence Eron, Telemedicine: The Future of Outpatient Therapy?, Clinical
Infectious Diseases, Vol: 51(S2), S224-S230, S229 (2010), available at
http://cid.oxfordjournals.org/content/51/Supplement_2/S224.full.pdf+html (last visited June 15, 2012) (noting the
concern of some physicians that telemedicine may foster “complacency regarding the risks and responsibilities—
many of which are as yet unknown—that distant medical intervention, consultation, and diagnosis carry”).
331 See Pilot Conference Call Mar. 26 Ex Parte Letter (WNYRAHEC et al.) at 2.
332 USAC Observations Letter at 2. See also Pilot Conference Call Mar. 26 Ex Parte Letter (AEN et al.) at 1
(noting that there was more interest in the Virginia Acute Stroke Telehealth project after initial sites showed that the
proposed uses were viable); Pilot Conference Call Mar. 26 Ex Parte Letter (WNYRAHEC et al.) at 2 (describing
that Geisinger Health System has already fully implemented EHRs and emphasizing the importance of getting the
community together and involved to win their trust).
333 2006 Pilot Program Order, 21 FCC Rcd at 11111, 11114, 11116, paras. 3, 10, 16; see also 2007 Pilot Program
Selection Order
, 22 FCC Rcd at 20368-69, 20384-85, paras. 19, 50.
334 USAC Aug. 6 Data Letter at 2.
335 USAC June 27 Data Letter at 1; USAC May 4 Data Letter at 3; USAC May 30 Data Letter at 2.
336 USAC May 30 Data Letter at 2.
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their individual success, and rural HCPs value their connections to urban hospitals.337 These benefits
include:
·
Health Care Benefits:
·
Access to Specialists. Participation of urban sites enables rural providers to access
medical specialists who might otherwise be unavailable or very distant. 338 Rural areas
generally do not have the same access to specialist care (or even primary care) that urban
areas have.339 There is a shortage of specialists in rural areas, and rural health care
providers can use broadband networks to connect to urban HCPs and obtain access to the
medical specialists who work there. Telemedicine has allowed shortened waiting times
at rural facilities for patients who need specialized medical care (often, hours rather than
days).340 Connections to urban locations also allow rural hospitals to move from a “patch
and ship” mode – where they stabilize patients and then send them to urban hospitals – to
keeping more patients in the rural hospital while consulting specialists remotely.341 This
not only can result in better patient care, it also can help rural hospitals financially.342


337 See, e.g., Pilot Conference Call Mar. 13 Ex Parte Letter (PMHA et al.) at 2 (group of five Pilot projects stated
that urban HCP participation is “the key to the networks’ success”); Colorado Feb. 28 Ex Parte Letter at 2 (stating
that Colorado has created a 60 percent rural, 40 percent urban statewide health care network that “undergirds,
complements, and strengthens the existing and necessary urban/rural interdependencies,” and stating that supporting
only rural sites fails to recognize the reality of urban/rural interdependencies); NOSORH Mar. 28 Ex Parte Letter at
1 (stating that in Minnesota, urban hospitals are typically the hubs of health care networks, and more and more rural
hospitals are joining as spoke sites to those hubs); Pilot Conference Call Mar. 26 Ex Parte Letter (WNYRAHEC et
al.
) at 2-3 (WNYRAHEC stated that without its urban partners, it would be “building a road to nowhere”).
338 USAC Observations Letter at 5; PSPN Feb. 23 Ex Parte Letter at 1 (rural hospitals are “referring” sites, and the
regional or tertiary hospitals are usually located in urban areas and serve as the “consulting” sites); OHN Feb. 28 Ex
Parte
Letter at 6-7 (stating that the subsidy for urban providers is critical to supporting integrated health care
delivery, that rural/frontier providers are looking for improved access to urban specialists and resources to augment
their dwindling clinical and operational resources, and that without the urban centers of excellence being on and
actively using the network connection, there would be no value to the rural/frontier providers in connecting; also
noting that in Oregon, one university hospital and two pediatric hospitals in Portland provide much of the specialty
care to rural facilities); Pilot Conference Call Mar. 13 Ex Parte Letter (PMHA et al.) at 2-3 (group of five Pilot
projects stated that rural HCPs value their connection to urban hospitals and their instant access to specialized care);
Pilot Conference Call Mar. 26 Ex Parte Letter (AEN et al.) at 1 (group of five Pilot projects stated that the inclusion
of urban sites in the Pilot Program was critical to providing specialty care, because of the shortage of specialists in
urban areas); USAC Mar. 16 Site Visit Reports at 14 (Henry County Health Center in Iowa reports that it primarily
uses its broadband connection for radiology services, as there is no radiologist on staff); USAC Apr. 27 Site Visit
Reports at 3 (patients at the Coffee Walk-in Clinic in southeastern Georgia can see specialists in Atlanta, Savannah,
or Jacksonville that they would otherwise have no access to or would have to travel several hours in each direction
to see).
339 See NRHRC Dec. 27 Ex Parte Letter at 2; OHN Feb. 28 Ex Parte Letter at 7; USAC Observations Letter at 5;
Pilot Conference Call Mar. 16 Ex Parte Letter at 1-2 (ARCHIE et al.) at 1 (inclusion of urban sites in the Pilot
Program was critical to providing specialty care, because of the shortage of specialists in rural areas).
340 See, e.g., USAC Mar. 16 Site Visit Reports at 11.
341 Pilot Project Conference Call Mar. 16 Ex Parte Letter (ARCHIE et al.) at 1-2. See also Pilot Project Conference
Call Mar. 25 Ex Parte Letter (WNYRAHEC et al.) at 2; USAC Observations Letter at 5; Pilot Conference Call Mar.
13 Ex Parte Letter (PHMA et al.) at 2; OHN Feb. 28 Ex Parte Letter at 7 (no value for rural providers to connect to
their network without the urban centers on the network since rural HCPs “are looking for improved access to urban
specialists and resources to augment their dwindling clinical and operational resources”).
342 Pilot Conference Call Mar. 13 Ex Parte Letter (PHMA et al.) at 2-3, ORHP Apr. 10 Ex Parte Letter at 2.
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Some experts believe that primary care physicians will be more likely to stay in rural
areas if they can draw on those urban resources via broadband connections.343
·
Health Care Cost Savings. As discussed above, and as demonstrated through the
implemented Pilot projects, there is an enormous potential for health care cost savings if
rural health care providers can use telemedicine to keep patients in their rural
communities, through reduced hospital stays and lower transportation costs. This may
also in some instances produce additional revenue streams for the health care providers.
Leveraging the resources in urban areas to benefit rural providers is an efficient means to
keep patients in rural communities.344
·
Training of Health Care Personnel in Rural Areas. Broadband connections to urban
hospitals and universities can provide opportunities for training and for transfer of
expertise to rural areas.345 There is a shortage of trained health professional and health IT
experts in rural areas.346 Broadband connections to urban locations can deliver necessary
expertise and training to those rural areas, thus accelerating their adoption of medical best
practices, as well as implementation of electronic health records and other health IT
applications.347
·
Administrative Benefits:
·
Leadership of Consortia. As noted above, the organizers and leaders of many of the
projects are urban entities – especially hospitals and university medical centers.348 For
example, the lead entity for HUBNet is Avera Health in Sioux Falls, South Dakota, the
lead entity for the PSPN is the Medical University of South Carolina in Charleston, and
the lead entity for the Iowa Rural Health Telecommunications Program is the Mercy
Health System in Des Moines.349 In some cases, the urban entities already owned or led


343 See supra para. 70.
344 See supra Section IV.C.
345 See supra n. 251 and accompanying text.
346 See supra para. 63.
347 Pilot Conference Call Mar. 26 Ex Parte Letter (WNYRAHEC et al.) at 2-3 (WNYRAHEC stated that it is
important that urban medical centers participate because creativity and innovation is located there); NRHRC Dec. 27
Ex Parte Letter at 1 (explaining that due to the current health IT workforce shortage, vendors are short staffed and
conducting much of the training for implementation of EHR systems over videoconference links, which HCPs need
at least a 5 Mbps connection to access); USAC Mar. 16 Site Visit Reports at 6 (explaining that Avera provides
participating rural HCPs with 24/7 order review for patients in outlying hospitals, which is necessary because most
rural HCPs do not have pharmacists on staff, and that the E-Pharmacy program has allowed Avera Flandreau, a rural
hospital, to meet stage one of meaningful use requirements).
348 USAC Observations Letter at 4-5 (stating that for most Pilot projects, urban centers provided necessary
leadership to bring disparate stakeholders together, given that stakeholders include different health care disciplines
and market competitors).
349 USAC Mar. 16 Site Visit Reports at 5, 9, 13. Examples of other such projects include the California Telehealth
Network (spearheaded by the University of California system and managed initially through the University of
California Davis Health System); Rocky Mountain HealthNet (coordinated by the Colorado Behavioral Healthcare
Council, which is based in Denver); and Colorado Health Care Connections (sponsored and housed at the Colorado
Hospital Association in the Denver metropolitan areas). See Quarterly Report of the California Telehealth Network,
WC Docket No. 02-60, at 4 (filed Apr. 27, 2012); Quarterly Report of the Rocky Mountain Healthcare Network,
(continued . . .)
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networks of rural hospitals and clinics when they made the decision to apply as a Pilot
project. The Pilot projects often added additional sites to these pre-existing networks, or
created state-wide or multi-state “networks of networks.”350
·
Sources of Technical Expertise. The technical expertise necessary to design networks,
develop RFPs, and manage the IT aspects of the network is often located at urban sites.
Urban sites also often have greater expertise in telemedicine, electronic health records,
Health IT, computer systems, and other broadband telehealth applications. 351
·
Financial Resources. Many of the Pilot projects have depended on the financial and
human resources of urban entities to absorb the administrative costs of participation in
the Pilot, such as the cost of planning and organizing the Pilot applications, applying for
funding, preparing RFPs, contracting for services, and implementing the Pilot projects.
Those expenses are not eligible for support under the Pilot Program. 352
·
Technical Benefits:
·
Efficiency of Network Design. In addition, network design in many cases has been more
efficient and less costly in the Pilot Program than in the Primary Program, because the
Pilot Program funds urban locations. Under the Primary Program, circuits are only
eligible for funding if one end of the circuit terminates at an eligible rural entity, which
(. . . continued from previous page)


WC Docket No. 02-60, at 1 (filed Apr. 26, 2012); Quarterly Report of Colorado Health Care Connections, WC
Docket No. 02-60, at 2 (filed Apr. 26, 2012).
350 See, e.g., HUBNet Program Application, WC Docket No. 02-60 (filed May 7, 2007) at 5-7; PSPN Program
Application, WC Docket No. 02-60 (filed May 4, 2007) at 9-17; IRHTP Program Application, WC Docket No. 02-
60 (filed May 7, 2007) at 10-11. See also Pilot Conference Call Mar. 16 Ex Parte Letter at 1-2 (ARCHIE et al.) at 2
(several projects described their ultimate goal as achieving a “network of networks” linking pre-existing networks of
health care providers together, sometimes with planned state-wide coverage); NOSORH Mar. 28 Ex Parte Letter at
1 (in Minnesota, the Pilot Program instigated the creation of a “network of networks” in which five different
networks joined together to form one umbrella network).
351 See NRHA Dec. 21 Ex Parte Letter at 1 (describing difficulty rural health care providers have in understanding
their overall broadband needs, and the relative paucity of rural health providers’ IT budgets); OHN Feb. 28, 2012 Ex
Parte
Letter at 7 (noting that in Oregon, many health care institutions do not have a knowledgeable IT staff); John
Gale Mar. 29 Ex Parte Letter at 1-2 (stating that the typical rural health clinic has an average of 2.7 physicians and
1-1.5 mid-level practitioners, and that the majority of RHC practitioners must see five to six patients per hour to
remain financially sustainable, leaving little time to devote to technological upgrades or meetings with consultants);
USAC Observations Letter at 5 (urban centers typically have IT expertise and technology typically not found in
rural areas, and the participation of urban HCPs in the Pilot Program, especially the urban leadership, has resulted in
urban entities providing their IT expertise to their rural counterparts to assist with connectivity issues, training rural
staff how to utilize the new resources, and equipment installation); Pilot Conference Call Mar. 13 Ex Parte Letter
(PMHA et al.) at 2-3 (group of five Pilot projects stated that urban HCPs have provided technical support to rural
HCPs and trained some of their IT staff, which has led to an improved rural HCP workforce).
352 Pilot Conference Call Mar. 13 Ex Parte Letter (PMHA et al.) at 2-3 (group of five Pilot projects stated that many
rural HCPs rely on urban sites in their network to pay for their networks’ administrative expenses); Colorado Feb.
28 Ex Parte Letter at 1 (citing “the recognition by urban hospitals of the common good provided by this project and
their willingness to provide financial support” as a success factor); Pilot Conference Call Mar. 26 Ex Parte Letter
(WNYRAHEC et al.) at 2-3 (Bacon County noted it was able to purchase its (non-RHC-eligible) telehealth
equipment through a grant from an urban hospital in its network); USAC Mar. 16 Site Visit Reports at 6 (rural ER
nurses can connect to urban site with the push of a button, and the urban “presence” allows rural nurses to focus on
providing patient care without worrying about the paperwork, which the urban site handles).
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can incentivize HCPs to maximize funding by ensuring that all connections within the
network terminate at an eligible rural entity.353 As a technical and financial matter, this
can lead to less efficient network design. For example, it may be more efficient to design
the middle-mile component of a regional or statewide network by using connections
between urban sites. Pilot projects were able to design their networks with maximum
network efficiency in mind, since there is no negative impact on funding from including
urban nodes within the network.354
90. Some Pilot projects observe that urban locations might not have been willing to assume
leadership roles, taken on the administrative burdens, or contributed technical expertise if they had not
also been allowed to obtain discounts on their broadband connections to rural sites.355 USAC notes that
many urban locations were able to serve as hubs for Pilot Program networks because they were eligible
to receive funding to purchase equipment that allowed them to establish the network connections and
any financial hardship associated with purchasing equipment was no longer a barrier to entry.356
Participants indicate that urban hospitals are often as hard pressed for available funding as rural
hospitals.357

C.

Ownership of Broadband Facilities Versus Purchased Services

91. The Pilot Program was designed to fund broadband infrastructure deployment and the
creation of broadband networks of health care providers.358 The Pilot projects have achieved these goals,
though not usually by owning the broadband facilities. In the 2007 Pilot Program Selection Order, the
Commission permitted Pilot projects to create their networks by leasing services or constructing and
owning their own broadband networks.359 For the most part, HCPs chose to assemble their networks
through purchasing services, including through indefeasible rights of use (IRU) or other long-term
arrangements, rather than by owning and operating the networks themselves, as discussed above in
Section III.F.360 In effect, they have demonstrated that dedicated health care networks do not require


353 USAC Observations Letter at 5.
354 Id.
355 Pilot Conference Call Mar. 13 Ex Parte Letter (PMHA et al.) at 3 (summarizing call with five Pilot project
representatives, who stated in relevant part that due to the current economic environment, budgets are tight for urban
HCPs, and it may be difficult for urban HCPs to continue to provide support to rural HCPs in their networks if they
are ineligible to receive RHC program funding themselves); PSPN Feb. 23 Ex Parte Letter at 1 (stating that urban
hospitals, which serve as “consulting” sites for rural hospitals in telemedicine, are often as hard-pressed for available
funding as the rural hospitals and cannot bear the non-discounted costs of participation in the networks, and without
their participation, vital links in the chain of health care are missing).
356 USAC Observations Letter at 5.
357 Pilot Conference Call Mar. 13 Ex Parte Letter (PMHA et al.) at 3 (summarizing call with five Pilot project
representatives, who stated in relevant part that due to the current economic environment, budgets are tight for urban
HCPs, and it may be difficult for urban HCPs to continue to provide support to rural HCPs in their networks if they
are ineligible to receive RHC program funding themselves); PSPN Feb. 23 Ex Parte Letter at 1 (stating that urban
hospitals, which serve as “consulting” sites for rural hospitals in telemedicine, are often as hard-pressed for available
funding as the rural hospitals and cannot bear the non-discounted costs of participation in the networks, and without
their participation, vital links in the chain of health care are missing).
358 2006 Pilot Program Order, 21 FCC Rcd at 11111, 11114, paras. 1, 10.
359 2007 Pilot Program Selection Order, 22 FCC Rcd at 20397-98, para. 74.
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HCP ownership of those networks, although funding of network construction and upgrades can be
essential in order to provide rural HCPs to have access to broadband where it is not already available.361
92. There may be several reasons why Pilot projects have not generally chosen to construct and
own their own broadband facilities. First, running a network is a complex and technical task, and using
third-party services can be simpler.362 Second, it has not always proven necessary for projects to own
the facilities in order to obtain broadband deployment to sites previously unserved by high-speed
connections. In many cases, service providers have laid fiber and made other investments where
necessary to enable them to provide the services requested.363 Third, through long-term contracts,
prepaid leases, and IRUs, projects have been able to obtain low prices for long terms as well as high
service quality and reliability and virtual private network configurations.364 Thus, for many projects it
has been unnecessary for the Pilot projects to own the network facilities in order to secure good pricing
and high service quality. Fourth, by purchasing services as opposed to owning the network, projects can
obtain the underlying services from a range of service providers, and thus can obtain a broader
geographic reach, coordinated services, and often lower prices.365 Fifth, purchasing services allows
HCPs to avoid the risk and cost of owning facilities.366 Finally, HCPs are not permitted to sell, resell, or
(. . . continued from previous page)


360 See supra Section III.F; USAC Observations Letter at 7-8. Whether using owned or leased facilities, the projects
are still subject to requirements that they use the networks for health care purposes, that they not resell services over
the networks, and that they obtain a “fair share” contribution from ineligible sites on their networks. 2007 Pilot
Program Selection Order
, 22 FCC Rcd at 20416, para. 107.
361 See generally Section III.F above; USAC Observations Letter at 7-8.
362 See, e.g., Colorado Feb. 28 Ex Parte Letter at 2 (Colorado projects did not want to divert resources away from
their core competency, health care, into communications operations); Pilot Conference Call Mar. 13 Ex Parte Letter
(PMHA et al.) at 3 (group of Pilot projects stating that their core competencies did not include constructing and
owning networks, and that they preferred to purchase services); Pilot Conference Call Mar. 26 Ex Parte Letter (AEN
et al.) at 2 (noting comment that most stakeholders prefer not to own the physical facilities comprising their
network, but would rather defer to service providers that have experience and expertise in these matters to complete
any build out, and stating that in cases where construction is necessary, the HCP may issue one RFP for construction
and a second RFP for an experienced entity to manage the network on behalf of the health care provider); Pilot
Conference Call Mar. 16 Ex Parte Letter (ARCHIE et al.) at 3 (stating that while the Pilot Program helped prompt
the deployment of fiber or other high capacity facilities to many HCP sites where such facilities were not previously
available, health care providers do not want to own the network facilities).
363 See supra Section III.F; USAC Observations Letter at 7-8; USAC May 30 Data Letter at 3-4. See also, e.g.,
OHN Feb. 28 Ex Parte Letter at 3 (stating that OHN’s leased services model stimulated the deployment of 86.41
miles of new middle-mile connectivity across the farthest reaches of Oregon, and utilized 151.06 miles of existing
infrastructure).
364 See supra Sections III.E-III.H; USAC Observations Letter at 7-8; USAC May 30 Data Letter at 3-4; USAC Aug.
2 Data Letter at 4-5.
365 USAC May 30 Data Letter at 1- 3; USAC May 4 Data Letter at App. C; Colorado Feb. 28 Ex Parte Letter at 2
(by using leased services and leveraging existing communications infrastructure, Colorado projects were able to
include far more providers than if they had built and owned their own network); OHN Feb. 28 Ex Parte Letter at 1
(stating that OHN’s multi-vendor leased line network framework helped utilize the existing state fiber infrastructure
while creating the highest level of competition possible, allowing smaller local carriers to compete directly and
fairly with larger providers, which subsequently resulted in OHN’s members receiving the most competitive bids
(reduced costs) possible); Pilot Conference Call Mar. 13 Ex Parte Letter (PMHA et al.) at 3 (group of Pilot projects
stating that leasing services allowed the projects to reach many more health care providers than the construction
options).
366 See, e.g., Colorado Feb. 28 Ex Parte Letter at 2 (stating that CTN’s core competency is health care, and they did
not want to divert resources into telecommunications operations); OHN Feb. 28 Ex Parte Letter at 1 (stating that
(continued . . .)
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otherwise transfer communications services or network capacity purchased through the rural health care
mechanism.367 Although ineligible HCPs can still participate in networks if they pay a “fair share” of
network costs, some Pilot projects have had difficulty in determining the appropriate fair share that
ineligible for-profit network members should pay.368
93. Nevertheless, the ability to use program funds for some construction, even in limited
circumstances, benefited projects. Although the Pilot projects generally chose not to own their
broadband facilities, some did use Pilot project funding to enable service providers to build broadband
facilities, or to upgrade existing facilities, as discussed in Section III.F above.369 In many cases, last-
mile and even middle mile broadband facilities do not exist in some of the rural areas that Pilot projects
serve, so construction was an important element in providing broadband capability to HCPs located in
those areas.370 Long-term contracts, prepaid leases, IRUs, and similar arrangements can help provide
incentives for communications service providers to build or upgrade network facilities where needed.371
Experience thus far suggests that these arrangements also provided HCPs with lower rates, higher
bandwidth, greater service quality, and long-term stability of pricing.372 In addition, some Pilot projects
have taken advantage of the Pilot Program’s broader definition of “eligible expenses” (compared with
the Primary Program), which includes construction costs. Two Pilot projects own their entire network,
and a number of other projects have decided to own parts of the network, or to own the Network
Operations Center (NOC).373 Those projects concluded that ownership of the facilities would bring
significant price and other benefits.374 In addition, others observe that the existence of a last-resort
option enabling the HCPs to construct and own their own broadband network facilities may help
encourage bidders to respond to RFPs with more favorable offerings and lower prices, and that such an
option gives HCPs the ability to construct broadband connections in situations in which no provider is
willing to do so.375
(. . . continued from previous page)


utilizing existing fiber infrastructure to create a leased line network granted OHN a lot less administrative burden
and overhead versus owning the actual equipment and fiber connection).
367 Section 254(h)(3) of the 1996 Act provides that “telecommunications services and network capacity provided to a
public institutional telecommunications under this subsection may not be sold, resold, or otherwise transferred by
such user in consideration for money or any other thing of value.” 47 C.F.R. § 254(h)(3). See also 47 C.F.R. §
54.617; Universal Service First Report and Order, 12 FCC Rcd at 8795, para. 33.
368 See Pilot Conference Call Mar. 26 Ex Parte Letter (AEN et al.) at 3; 2006 Pilot Program Order, 21 FCC Rcd at
11116, para. 17. For example, Pilot projects that wanted to include ineligible sites on a Pilot-owned network would
need to determine, with USAC, how to handle such issues as fair share, incremental costs, excess capacity and
excess bandwidth. See Pilot Program Frequently Asked Questions, available at
http://www.fcc.gov/encyclopedia/rural-health-care-pilot-program.
369 See also USAC Observations Letter at 7-8.
370 Pilot Conference Call Mar. 16 Ex Parte Letter (ARCHIE et al.) at 3 (stating that ownership of newly constructed
facilities only makes economic sense where there are gaps in availability).
371 See USAC Observations Letter at 4.
372 Id.; see also USAC Aug. 2 Data Letter at 4.
373 USAC Observations Letter at 7-8.
374 See, e.g., Pilot Conference Call Mar. 26 Ex Parte Letter (WNYRAHEC et al.) at 1 (noting that having a private
fiber network as part of the larger network helped St. Joseph’s to control costs and ensure long-term success, as it
could be cost-prohibitive to buy from a carrier the 1 to 10 Gbps connections needed to move medical images).
375 See, e.g., HIEM Ex Parte Letter at 2 (stating that HIEM’s network would be a small fraction of what it is now if
HIEM had simply leased facilities from the outset, and arguing that the Commission should retain the option for
(continued . . .)
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D.

Funding of Network Design Studies

94. As mentioned previously, the scope of eligible expenses is broader in the Pilot Program than
the Primary Program and included network design studies.376 However, those projects that decided to
take advantage of the opportunity to have network design studies conducted before they started to build
their networks may have been delayed by doing so.377 The six projects that have invoiced USAC for
completing network design studies have gone through the Pilot Program administrative process to
request funding twice, once for the network design studies and a second time to solicit bids to build the
network. 378 Five of these six projects have experienced significant delays in implementing their
networks, as illustrated in the figure below.379

Figure 18 – Pilot Projects that Conducted Network Design Studies380

Pilot Project Name

Amount Committed

Percent of Original Award

for Network Design

Committed (As of Jan. 31, 2012)

Study

Oregon Health Network

$174,650
83.63%

New England Telehealth Consortium

$746,134
3.02%

Louisiana Department of Hospitals

$399,904
2.51%

Erlanger Health System

$38,250
1.74%

Arkansas Telehealth Network

$338,827
8.03%

Alaska eHealth Network

$208,888
2.00%

E.

Administrative Expenses

95. Some Pilot projects expressed frustration that administrative expenses are not an eligible
expense in the Pilot Program, and several have suggested such expenses should be supported.381 Such
(. . . continued from previous page)


program participants to construct network facilities, as removing that option from competitive bidding will change
how incumbent carriers approach the bid process).
376 See 2006 Pilot Program Order, 21 FCC Rcd at 11111, para. 1, 11115-16, paras. 14-15; see also 2007 Pilot
Program Selection Order
, 22 FCC Rcd at 20397-98, para. 74.
377 See USAC Aug. 2 Data Letter at 3.
378 Id.
379 USAC Observations Letter at 8. The sixth project sought funding for its Network Operations Center (NOC)
design only. Because the project only designed its NOC, it was able to lease lines to implement its network
simultaneously with the design of the NOC. It then issued an RFP for the NOC after the lines were in place and the
NOC design was completed, resulting in no delay. Id.
380 USAC Aug. 9 Data Letter at App. C.
381 Colorado Feb. 28 Ex Parte Letter at 2, Pilot Conference Call Mar. 26 Ex Parte Letter (AEN et al.) at 2
(discussing the difficulties faced by Pilot projects in raising sufficient administrative funds to engage stakeholders
and pursue the complex application and proposal process, and noting that one Pilot project had invested $500,000 in
administrative expenses due to the number of stakeholders involved, while another project had a seven figure budget
for administrative expenses). Some Pilot Projects also noted that the exclusion of administrative expenses as an
eligilble expenses was hardship on the projects. See Pilot Conference Call Mar. 13 Ex Parte Letter (PMHA et al.) at
2 (stating that seeking funds to cover administrative expenses caused projects significant delay in getting their
networks started, and that it was difficult for projects to come up with their own funds to pay for their own
administrative expenses until their networks were built); Pilot Conference Call Mar. 16 Ex Parte Letter (ARCHIE et
al.
) at 1 (without funding for administrative expenses, it is hard to find funding to pull together a network of eligible
HCPs, develop the proposals, and pursue the application process, especially given the cash-strapped position of
many rural HCPs).
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non-reimbursable costs include project design, identifying potential HCP participants, preparing
application materials, obtaining letters of agency, preparing RFPs, and working with USAC to put
together necessary application materials and associated documentation. For some Pilot projects, it came
as a surprise that administrative costs were not covered, especially for those who were familiar with
grant programs, which generally do cover such overhead costs. Many projects have observed that the
administrative, technical, and communication requirements to participate in the program are substantial
and require a staff that has marketing, communications, legal, healthcare, finance, policy, and/or IT
knowledge and expertise.382 As a result, some projects have spent large amounts on administrative
expenses. For example, Oregon Health Network estimated that it spends $930,000 annually on
administrative expenses, and another Pilot project states that it has invested up to $500,000 in
administrative expenses as of February 2012.383 Western New York Rural Area Health Education Center
also notes that its direct administrative expenses are $65,000.384 Indiana Telehealth Network (ITN)
initially received a $250,000 grant from the Indiana Office of Community and Rural Affairs for
ineligible administrative costs.385 However, as of 2011, the ITN now covers administrative costs by
charging participating hospitals and other rural health care facilities $2,400 and $1,200 respectively per
year.386 Other projects also fund administrative expenses through membership fees.387 As noted above
in Section V.B, many relied on the urban providers in their networks to help support their administrative
expenses, by donating resources, both personnel and otherwise.

F.

Requirement for Sustainability Plans

96. Sustainability Plan Requirement. Many Pilot projects expressed difficulty in predicting their
long-term sustainability, and some plan on relying on sources outside of their networks for long-term
funding.388 Before they can receive Pilot Program support, projects were required to submit
sustainability plans detailing their plans to ensure the long-term success of rural health care networks
after the Pilot program ceases to exist and their plans to prevent wasteful allocation of limited universal
service funds.389 Sustainability plans were required in the 2007 Pilot Program Selection Order, and in


382 OHN Feb. 28 Ex Parte Letter at 6; see also Pilot Conference Call Mar. 13 Ex Parte Letter (PMHA et al.) at 2;
Pilot Conference Call Mar. 16 Ex Parte Letter (ARCHIE et al.) at 2 (explaining that it was difficult to find funds to
pay for administrative expenses, which caused delay”); Colorado Feb. 28 Ex Parte Letter at 2 (stating that even
with the efficiencies of the consortium approach, the two Colorado Pilot projects experienced a substantial
administrative burden to respond to program requirements, and noting that since the Pilot Program enabled creation
of a statewide health care network, there was no pre-existing entity that had responsibility and a concomitant
budget).
383 Pilot Conference Call Mar. 26 Ex Parte Letter (WNYRAHEC et al.) at 3 (providing information on
administrative expenses incurred by Pilot projects, which ranged from $42,000 to $930,000 annually, depending on
the project); Pilot Conference Call Mar. 26 Ex Parte Letter (AEN et al.) at 2.
384 Pilot Conference Call Mar. 26 Ex Parte Letter (WNYRAHEC et al.) at 3.
385 Quarterly Report of Indiana Telehealth Network, WC Docket No. 02-60 (filed Jan. 27, 2012) at 34.
386 Id.
387 Pilot Conference Call Mar. 26 Ex Parte Letter (WNYRAHEC et al.) at 3; Quarterly Report of Pacific Broadband
Telehealth Demonstration Project, WC Docket No. 02-60 (filed Jan. 29, 2012) at 16.
388 See, e.g., Pilot Conference Call Mar. 26 Ex Parte Letter (AEN et al.) at 2. Some rural HCPs stated that it can be
difficult to secure funding for broadband connections, even with a universal service discount. See Pilot Conference
Call Mar. 16 Ex Parte Letter (ARCHIE et al.) at 1; NRHRC Dec. 27 Ex Parte Letter at 2 (many critical access
hospitals and small rural hospitals are experiencing negative margins and facing increased difficulties in accessing
capital); John Gale Mar. 29 Ex Parte Letter at 2.
389 2007 Pilot Program Selection Order, 22 FCC Rcd at 20388, paras. 54, 108.
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April 2009 the Commission provided more details about what projects should include in their
sustainability plans.390 Among other things, the Commission explained that sustainability plans should
include a description of how a project will be self-sustaining in the future, network ownership and
membership arrangements, and future sources of support such as a project’s reliance on their
participating providers, government funding and/or private donors to ensure continued financial viability
for a specific period of time.391 The Commission also recommended that a demonstration of
sustainability for ten years would be generally appropriate, but that the plan should be commensurate
with the investments made with Pilot Program funds.392
97. Pilot projects anticipate relying upon a variety of internal and external funding sources to
achieve sustainability, including government and private organization grants, as demonstrated by the
figure below. Nearly 10 percent of Pilot projects declared in their sustainability plans their intent to rely
exclusively on participating health care providers,393 and over half of the Pilot projects plan to look to
both participating providers and anticipated cost savings/new revenue streams to achieve network
sustainability.394 Some Pilot projects include in their sustainability plans the projected cost savings they
expect to derive from achieving economies of scale.395 Several Pilot projects also stated that enhanced
telehealth capabilities will reduce travel, training, and operational costs – cost savings that can help
project sites offset network connectivity costs.396 Pilot projects also highlighted the potential revenue
stream telehealth applications may provide participating entities, particularly with respect to tele-
psychiatry services.397 Figure 19, below, lists the categories of sustainability plan sources and the
frequency with which Pilot projects intend to rely on these categories in their sustainability plans.


390 Rural Health Care Pilot Program: Frequently Asked Questions and Answers, available at
http://www.fcc.gov/encyclopedia/rural-health-care-pilot-program (last viewed June 15, 2012). These elements
included how projects would obtain a 15% funding match for their project; the project’s projected sustainability
period; principal factors the project considered in demonstrating their sustainability, their terms of membership in
the network (i.e., agreements made by network members to enter into network, financial commitments made by
proposed members of the network, membership fees, financing of excess bandwidth), sources of future support,
management of excess capacity (if applicable), and the ownership structure of the network. Id.
391 Id.
392 Id.
393 Quarterly Report of Greater Minnesota Telehealth Broadband Initiative, WC Docket No. 02-60, at 14 (filed Jan.
31, 2012); Quarterly Report of Illinois Rural HealthNet Consortium, WC Docket No. 02-60, at 19-20 (filed Jan. 24,
2012); Quarterly Report of Michigan Public Health Institute, WC Docket No. 02-60, at 30-33 (filed Jan. 30, 2012);
Quarterly Report of Rural Wisconsin Healthcare Cooperative Information Technology Network, WC Docket No.
02-60, at 43-44 (filed Jan. 31, 2012).
394 This information is based on staff review of Pilot participants’ 2011-2012 quarterly reports.
395 See supra Section IV.C.2.
396 See id.
397 See id.
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Figure 19 – Sustainability Plan Sources398

Sustainability Plan Sources (Other than FCC Support)

Count

Percentage

Participants; New revenue and/or Cost savings
26
52%
Participants; Govt. funding
5
10%
Participants
4
8%
No details provided
4
8%
Participants; New revenue and/or Cost savings; Govt. funding
3
6%
Participants; New revenue and/or Cost savings; Govt. funding;
Private donors
2
4%
New revenue streams and/or Cost savings
2
4%
New revenue streams and/or Cost savings; Govt. funding
2
4%
Participants; Govt. funding; Private donors
2
4%
Total
50
100%
98. While Figure 19 reflects significant planning on the part of the Pilot projects, several
projects noted that accurately predicting a long term sustainability plan was a “best guess at most.”399
Further, as many networks are not yet operational, on-going costs of the network may be difficult to
predict accurately. Some Pilot projects voice concerns about submitting plans that attempt to forecast
their sustainability for more than five years, given the rapid and unpredictable changes in healthcare
needs and broadband technology.400 Additionally, one project notes that it was difficult to develop a
sustainability plan because that requirement was not part of the original application.401 Nevertheless,
USAC notes that “the benefits of the sustainability plan show thoughtful planning as to the HCPs
planned network use, demonstration of administrative function necessary to maintain the network, and a
demonstration of a financial model that would ensure sustainability.”402
99. Continued Reliance on FCC Support by Pilot Participants. Over half of the Pilot project
sustainability plans reported their intent to rely on FCC support in the future. However, a sizeable
minority (38 percent) of all projects did not mention the potential for continued Primary Program
support.403 While this omission may be due to a lack of awareness, it may also be attributable to
participants’ uncertainty with respect to the form that continued FCC support will take. For example, the
Adirondack-Champlain Telemedicine Information Network stated that “[a]t this time we have not
included any budget references for sites that meet the eligibility requirements for the regular RHC
funding program . . . [and] will apply for funding at a future date once we determine how the Primary
Program will be restructured.”404 Likewise, Heartland Unified Broadband Network laid out three
sustainability plan scenarios in the event that either the Primary Program provided an 85 percent


398 This information is based on staff review of Pilot participants’ 2011-2012 quarterly reports.
399 See, e.g., Quarterly Report of Southwest Telehealth Access Grid (SWTAG), WC Docket No. 02-60, at 17 (filed
Jan. 27, 2012).
400 Pilot Conference Call Mar. 26 Ex Parte Letter (AEN et al.) at 2.
401 Id. at 2.
402 USAC Observations Letter at 5.
403 This information is based on staff review of Pilot participants’ 2011-2012 quarterly reports.
404 Quarterly Report of Adirondack Champlain Telemedicine Information Network (ACTION), WC Docket No. 02-
60, at 17 (filed Jan. 20, 2012).
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discount rate, maintained current funding levels, or if all funding for rural healthcare providers was
phased out.405

G.

Multi-Year Commitments (Waiver of Annual Filing Requirement)

100.
Some Pilot projects identified the waiver of the annual filing requirement as beneficial.
In the Primary Program, applicants must reapply to the program annually because they can only receive
a funding commitment for the 12 months of the funding year.406 In contrast, the 2007 Pilot Program
Selection Order
waived the annual filing requirement for Pilot projects,407 which enables USAC to issue
funding commitments based on the length of the contract (initial contract term only). The waiver of the
annual filing requirement has created administrative efficiencies for USAC and the Pilot projects,
including a reduction of hundreds of forms Pilot projects would otherwise have had to complete each
year. It also has given projects incentives to sign long-term contracts that allowed them to lock in stable
prices, and reduced the number of funding requests USAC had to review.408 North Carolina Telehealth
Network notes that it is helpful that sites in the Pilot Program are guaranteed funding over the long-term,
as compared to the Primary Program, where participants must seek funding approval every year (except
in the case of “evergreen contracts”).409

H.

Flat-Rate Discount

101.
Many of the Pilot Program participants appreciate the administrative simplicity and
funding certainty provided by the Pilot Program’s single, flat-rate discount for eligible infrastructure,
purchase of services and other expenses.410 In the Primary Program, rural health care provider funding
for telecommunications services is based on either the urban/rural price differential or on “mileage based
support.”411 In contrast, in the Pilot Program, funding is determined on a flat percentage discount for
eligible services.412
102.
Projects identify three ways in which the flat-rate discount approach is helpful. First,
they say it has reduced the complexity of participating in the Pilot Program, particularly from the


405 Quarterly Report of Heartland Unified Broadband Network (HUBNet), WC Docket No. 02-60, at 57 (filed Jan.
30, 2012).
406 47 C.F.R. § 54.623(d).
407 2007 Pilot Program Selection Order, 22 FCC Rcd at 20405-6, para. 86.
408 USAC Observations Letter at 4.
409 Pilot Conference Call Mar. 13 Ex Parte Letter (PMHA et al.) at 3.
410 See Pilot Conference Call Mar. 13 Ex Parte Letter (PMHA et al.) at 3; see also Pilot Conference Call Mar. 26 Ex
Parte
Letter (AEN et al.) at 3; Pilot Conference Call Mar. 26 Ex Parte Letter (WNYRAHEC et al.) at 4.
411 47 C.F.R. §§ 54.605, 54.607, 54.609; USAC Observations Letter at 6. The Primary Program provides support for
telecommunications services based on the difference between the rural and urban rate for non-mileage based charges
or for the applicable distance-based charges (minus the Standard Urban Distance (SUD)) for the distance between
the rural health care provider and the farthest point on the jurisdictional boundary of the largest city in the health
care provider’s state. If an eligible rural HCP chooses to connect to a point beyond this Maximum Allowable
Distance (MAD), it must pay the appropriate unsupported rate for any distance-based charges incurred beyond the
MAD. See USAC Rural Health Care FAQs, available at http://www.usac.org/rhc/about/getting-started/faqs.aspx
(last visited June 8, 2012). The SUD is a mileage allowance for urban areas. There is a single SUD for each state.
See USAC Rural Health Care Standard Urban Distance, available at
https://www.rhc.universalservice.org/applicants/sud.asp (last visited June 8, 2012).
412 See 2007 Pilot Program Selection Order, 22 FCC Rcd at 20361, para. 2.
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perspective of consortium applicants, and has given them more certainty with respect to the discount
level they can expect. Pilot Program participants are not required to calculate funding based on the
urban/rural price differential and thus do not have to obtain pricing information to determine the
urban/rural differential.413 Calculating support for high-bandwidth circuits, like those supported by the
Pilot Program, is particularly complex in the Primary Program because it often requires a complicated
calculation of the Maximum Allowable Distance or Standard Urban Distance to determine mileage based
support.414 In addition, some rural areas have no available broadband service offerings, making it
difficult to determine the appropriate discounts under the Primary Program.415 Second, according to
some participants, the flat-rate discount allows Pilot projects to focus on efficiency when designing their
networks instead of making sure they take maximum advantage of the urban/rural price differential.416
Third, the flat-rate discount allows USAC to process application forms more efficiently because it does
not require the use of complicated formulas based on mileage-based support or the urban/rural price
differential to determine discount levels.417 The flat-rate discount provides predictability to the funding
amounts projects can expect to receive.418
103.
The flat-rate discount also makes it easier for USAC to fund Pilot projects’ shared
services and backbone connections. The Pilot Program requires consortium participants to submit a
detailed line-item cost worksheet that includes a breakdown of total network costs when submitting their
funding requests to USAC (“Network Cost Worksheet”). According to USAC, shared services and
backbone connections are much easier to fund via the Network Cost Worksheet because eligible services
are funded at a flat-rate discount level, without regard to mileage or to comparisons between urban and
rural rates, as would be required under the Primary Program.419

I.

Discount Percentage

104.
A number of Pilot projects state that the size of the discount (85 percent) was a key
reason for their success in attracting HCPs to join their networks and start telemedicine programs.420
Some stated that the 85 percent discount makes broadband affordable for many HCPs.421 By contrast, the


413 See USAC Observations Letter at 6-7; NRHA Dec. 21 Ex Parte Letter at 1 (some health care providers do not
apply for the Primary Program due to uncertainty as to how much of a discount they may receive).
414 USAC Observations Letter at 7. See supra n. 411.
415 See Pilot Conference Call Mar. 13 Ex Parte Letter (PMHA et al.) at 3; Pilot Conference Call Mar. 16 Ex Parte
Letter (ARCHIE et al.) at 3.
416 See USAC Observations Letter at 5.
417 See USAC Observations Letter at 7. See also Pilot Conference Call Mar. 26 Ex Parte Letter (WNYRAHEC et
al.
) at 4 (Pilot projects discussing the simplicity of the flat rate discount as compared to the urban/rural differential
in the Primary Program).
418 See Pilot Conference Call Mar. 13 Ex Parte Letter (PMHA et al.) at 3; PSPN Feb. 23 Ex Parte Letter at 2.
419 See USAC Observations Letter at 4, 6-7; USAC May 4 Data Letter at 4.
420 See Colorado Feb. 28 Ex Parte Letter at 2; Cabarrus Health Alliance et al. Comments at 1; Letter from Frank J.
Trembulak, Executive Vice President, Chief Operating Officer, Geisinger Health System, to Marlene H. Dortch,
Secretary, Federal Communications Commission, WC Docket No. 02-60 at 2 (filed April 4, 2012).
421 See Colorado Feb. 28 Ex Parte Letter at 2; PSPN Feb. 23 Ex Parte Letter at 2; Pilot Conference Call Mar. 13 Ex
Parte
Letter (PMHA et al.) at 3.
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urban/rural price differential in the Primary Program does not offer the same level of discount across the
board.422
105.
As discussed above in Section III.H, some projects note that the 85 percent discount
enables projects to provide higher bandwidths to health care providers in their networks at nearly the
same, if not lower, prices than they were paying for lower bandwidth services. Additionally, some
projects report that the 85 percent discount encourages urban health care providers to engage and
participate in their networks.423 Some projects observe that the 85 percent discount is large enough to
encourage the use of broadband connections for telemedicine programs.424
106.
Most projects were able to find funding for the program-required 15 percent match,
although even this amount was challenging for some HCPs. 425 Several projects state that the highest
matching requirement they could support was 25-30 percent of the entire project (i.e., 70-75 percent
discount level).426 In the majority of Pilot projects, participating health care providers themselves
provide funds for the minimum 15 percent contribution to network costs.427 Over 50 percent of Pilot
projects report that they look solely to their participating health care providers for the 15 percent
matching funds,428 while nearly 20 percent rely on participating health care provider funds in conjunction


422 For example, USAC found that eligible funding percentages for HCPs under the Primary Program would have
ranged between 51.04% and 89.79% (excluding Alaska). USAC Observations Letter at 6. See also Pilot
Conference Call Mar. 13 Ex Parte Letter (PMHA et al.) at 3.
423 Pilot Conference Call Mar. 13 Ex Parte Letter (PMHA et al.) at 3; Colorado Feb. 28 Ex Parte Letter at 2 (85
percent discount provided sites with incentive to collaborate in a network instead of acting alone).
424 See, e.g., Letter from Frank J. Trembulak, Executive Vice President, Chief Operating Officer, Geisinger Health
System, to Marlene H. Dortch, Secretary, Federal Communications Commission, WC Docket No. 02-60, at 2 (filed
April 4, 2012) (noting that 85 percent discount level lowered one barrier to participation in telemedicine programs),
Colorado Feb. 28 Ex Parte Letter at 2 (explaining that this degree of subsidy allowed sites that had formerly done
without broadband or were using substandard services (by health care information exchange standards) to “fully
participate at bandwidth speeds necessary for telemedicine applications”).
425 See Pilot Conference Call Mar. 13 Ex Parte Letter (PMHA et al.) at 2; Pilot Conference Call Mar. 16 Ex Parte
Letter (ARCHIE et al.) at 1; Pilot Conference Call Mar. 26 Ex Parte Letter (AEN et al.) at 1.
426 Pilot Conference Call Mar. 13 Ex Parte Letter (PMHA et al.) at 3.
427 Based on staff review of Pilot participant 2011-2012 quarterly reports.
428 Quarterly Report of Bacon County Health Services, Inc., WC Docket No. 02-60, at 10 (filed Jan. 26, 2012);
Quarterly Report of Colorado Health Care Connections, WC Docket No. 02-60, at 8 (filed Jan. 27, 2012); Quarterly
Report of Communicare, WC Docket No. 02-60, at 3 (filed Jan. 30, 2012); Quarterly Report of Frontier Access to
Rural Healthcare in Montana, WC Docket No. 02-60, at 11 (filed Jan. 12, 2012); Quarterly Report of Heartland
Unified Broadband Network (HUBNet), WC Docket No. 02-60, at 55 (filed Jan. 30, 2012); Quarterly Report of
Indiana Telehealth Network, WC Docket No. 02-60, at 34 (filed Jan. 27, 2012); Quarterly Report of Iowa Rural
Health Telecommunications Program, WC Docket No. 02-60, at 26 (filed Jan. 13, 2012); Quarterly Report of
Kentucky Behavioral Telehealth Network, WC Docket No. 02-60, at 30 (filed Jan. 27, 2012); Quarterly Report of
New England Telehealth Consortium, WC Docket No. 02-60, at 81 (filed Jan. 27, 2012); Quarterly Report of North
Country Telemedicine Project, WC Docket No. 02-60, at 17 (filed Jan. 30, 2012); Quarterly Report of Northeast
Ohio Regional Health Information Organization, WC Docket No. 02-60, at 22 (filed Jan. 30, 2012); Quarterly
Report of Pacific Broadband Telehealth Demonstration Project (PBTD), WC Docket No. 02-60, at 14-15 (filed Jan.
29, 2012); Quarterly Report of Pathways Community Behavioral Healthcare, WC Docket No. 02-60, at 13 (filed
Jan. 30, 2012); Quarterly Report of Pennsylvania Mountains Healthcare Alliance, WC Docket No. 02-60, at 9 (filed
Feb. 6, 2012); Quarterly Report of Rocky Mountain HealthNet, WC Docket No. 02-60, at 7, 10 (filed Jan. 27, 2012);
Quarterly Report of Rural Wisconsin Healthcare Cooperative Information Technology Network, WC Docket No.
02-60, at 22 (filed Jan. 31, 2012); Quarterly Report of Sanford Health Collaboration and Communication Channel,
WC Docket No. 02-60, at 4-5 (filed Jan. 30, 2012); Quarterly Report of Southern Ohio Healthcare Network, WC
(continued . . .)
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with state and/or federal grants.429 Within a Pilot project, costs per participant are often allocated based
on the amount of bandwidth the provider has purchased.430 Two Pilot projects noted that excess capacity
agreements have proved to be an important revenue stream to offset not only the 15 percent contribution,
but also to ensure the network achieves long term sustainability.431 The figure below lists the sources of
the 15 percent contribution relied upon by Pilot projects, as reported to the Commission. The
sustainability plans submitted by projects show sources of ongoing support after expiration of Pilot
Program funding, as discussed above in Section V.F.

Figure 20 – Source of 15% Match432

Source of 15% Match

Count

Percentage

Participants
27
52%
Participants; State Grant and/or Federal Grant
12
24%
Project Coordinator
5
10%
No response
2
4%
State Grant
1
2%
Participants; State Grant; Private Grant
1
2%
Private Grant
1
2%
Participants; Excess Capacity
1
2%
Excess Capacity
1
2%

Total


50
100%
107.
Of the projects that rely upon participating members for matching funds, many also ask
their members to help support ongoing network system operation and maintenance costs. While some
projects require participants to adjust operating budgets to accommodate operation and maintenance
costs, others projects include such costs in participant membership or connectivity fees. For example,
(. . . continued from previous page)


Docket No. 02-60, at 10-11 (filed Jan. 30, 2012) (also received loan); Quarterly Report of Southwest Telehealth
Access Grid (SWTAG), WC Docket No. 02-60, at 11 (filed Jan. 27, 2012); Quarterly Report of St. Joseph’s
Hospital, WC Docket No. 02-60, at 6 (filed Jan. 20, 2012); Quarterly Report of Southwest Alabama Mental Health
Consortium, WC Docket No. 02-60, at 7 (filed Jan. 30, 2012); Quarterly Report of Texas Health Information
Network Collaborative, WC Docket No. 02-60, at 3-4 (filed Jan. 30, 2012); Quarterly Report of Virginia Acute
Stroke Telehealth Project (VAST), Docket No. 02-60, at 5 (filed Jan. 30, 2012); Quarterly Report of Western New
York Rural Area Health Education Center, WC Docket No. 02-60, at 15 (filed Oct. 26, 2011).
429 Quarterly Report of Adirondack Champlain Telemedicine Information Network (ACTION), WC Docket No. 02-
60, at 5 (filed Jan. 20, 2012); Quarterly Report of Erlanger, WC Docket No. 02-60, at 5-6 (filed Jan. 30, 2012);
Quarterly Report of Illinois Rural HealthNet Consortium, WC Docket No. 02-60, at 14-15 (filed Jan. 24, 2012);
Quarterly Report of Michigan Public Health Institute, WC Docket No. 02-60, at 17 (filed Jan. 30, 2012); Quarterly
Report of Oregon Health Network, WC Docket No. 02-60, at 6 (filed Jan. 31, 2012); Quarterly Report of Palmetto
State Providers Network, WC Docket No. 02-60, at 42 (filed Jan. 30, 2012); Quarterly Report of Tennessee
Telehealth Network, WC Docket No. 02-60, at 7 (filed Jan. 31, 2012); Quarterly Report of Utah Telehealth
Network, WC Docket No. 02-60, at 6 (filed Jan. 30, 2012); Quarterly Report of West Virginia Telehealth Alliance,
WC Docket No. 02-60, at 11 (filed Jan. 30, 2012).
430 See Quarterly Report of Adirondack Champlain Telemedicine Information Network (ACTION), WC Docket No.
02-60, at 11 (filed Jan. 20, 2012) (“eligible participants will pay 15% of the network service delivery costs for each
site connection, based on the amount of bandwidth they choose to purchase”); Quarterly Report of Bacon County
Health Service, WC Docket No. 02-60, at 10 (filed Jan. 26, 2012) (“costs are allocated among HCPs based on the
contracted connectivity and equipment specified for each individual HCP site”).
431 Quarterly Report of Health Information Exchange of Montana, WC Docket No. 02-60, at 9 (filed Jan. 24, 2012);
Rural Nebraska Healthcare Network, WC Docket No. 02-60, at 8 (filed Jan. 26, 2012).
432 Based on staff review of Pilot participant 2011-2012 quarterly reports.
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the Utah Telehealth Network participants’ monthly membership fees include not only the network costs
of a T-1 line, but also technical support services and videoconferencing fees.433 By comparison, St.
Joseph’s Hospital requires consortium members to budget for maintenance and other recurring expenses
through “each facility’s normal operation budget process.”434

VI.

CONCLUSION

108.
The universal service support provided through the Pilot Program has done much to
foster the creation and extension of broadband networks of health care providers throughout the country.
The Pilot projects successfully demonstrate the value of broadband connectivity among rural and urban
health care providers. They offer numerous examples of how telemedicine and other telehealth
applications provided over broadband can produce better quality health care for patients in rural areas,
better access to medical specialists, and lower health care costs.
109.
Fifty Pilot projects are active in 38 states, and many are state-wide or regional networks.
Most are well on the way to full implementation. The flexibility in the Program’s design produced a
wide range among the projects in size, geographic coverage, network configurations, and features.
Many included a type of hub-and-spoke design, connecting rural health care providers to larger health
care providers that are often located in urban areas. Although the Pilot Program provides support for
both network construction and purchased services, the majority of Pilot projects have chosen to purchase
services from third-party providers, and many have taken advantage of longer term leasing arrangements
to obtain the bandwidth and quality they need.
110.
The Pilot Program also demonstrates the cost savings, relative administrative simplicity,
and network-facilitating value of a consortium approach. When coupled with competitive bidding and
multi-year funding, the consortium approach also has the potential to yield higher bandwidth, lower
prices, and better service quality for participating health care providers. Allowing urban health care
providers to participate in the program also has yielded many benefits. In many projects, the urban
HCPs were project leaders, contributed administrative and technical resources, and provided access to
medical specialists through telemedicine.
111.
The data and observations set forth in this Staff Report should provide valuable to the
Commission as it moves forward on reform of its permanent Rural Health Care program, enabling the
Commission to take full advantage of the opportunity to learn from the valuable experience of fifty
different Pilot projects.


433 Quarterly Report of Utah Telehealth Network, WC Docket No. 02-60, at 13 (filed Jan. 30, 2012).
434 Quarterly Report of St. Joseph’s Hospital, WC Docket No. 02-60, at 7 (filed Jan. 20, 2012).
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APPENDIX A

STATUS OF PILOT PROJECTS BY STATE

LEAD STATE

PROJECT

STATUS

(Other States)

AK

Alaska eHealth Network

Active

AL
Alabama Pediatric Health Access Network
Withdrew

AL

Southwest Alabama Mental Health Consortium

Active

AL

Northwest Alabama Mental Health Center

Active

AL
Rural Healthcare Consortium of Alabama
Withdrew

AR

Arkansas Telehealth Network

Active

AZ

Arizona Rural Community Health Information Exchange

Active

AZ
Tohono O'odham Nation Department of Information Technology
Missed 6/30/11 deadline

CA

California Telehealth Network

Active

CO

Colorado Health Care Connections

Active

CO

Rocky Mountain HealthNet

Active

FL
Big Bend Regional Healthcare Information Organization
Missed 6/30/11 deadline

GA

Bacon County Health Services, Inc.

Active

HI (GU, AS, MP)

Pacific Broadband Telehealth Demonstration Project

Active

IA (IL)

Iowa Health System

Active

IA (NE, SD)

Iowa Rural Health Telecommunications Program

Active

IL

Illinois Rural HealthNet Consortium

Active

IN

Indiana Telehealth Network

Active

KS
KanEd
Withdrew
KY
DCH Health System
Missed 6/30/11 deadline

KY

Communicare

Active

KY

Kentucky Behavioral Telehealth Network

Active

LA

Louisiana Department of Hospitals

Active

ME

Rural Western and Central Maine Broadband Initiative

Active

ME (VT, NH)

New England Telehealth Consortium

Active

MI

Michigan Public Health Institute

Active

MN

Greater Minnesota Telehealth Broadband Initiative

Active

MO

Missouri Telehealth Network

Active

MO

Pathways Community Behavioral Healthcare, Inc.

Active

MS
University of Mississippi Medical Center
Missed 6/30/11 deadline

MT

Health Information Exchange of Montana

Active

MT

Frontier Access to Rural Healthcare in Montana

Active

NC

North Carolina Telehealth Network

Active

NC
Albemarle Health
Merged435
NC
Western Carolina University
Merged436
NC
University Health Systems of Eastern Carolina
Merged437
ND
Health Care Research & Education Network
Withdrew

NE

Rural Nebraska Healthcare Network

Active



435 Albemarle Health merged with the North Carolina Telehealth Network. See Rural Health Care Support
Mechanism, North Carolina Telehealth Network, Albemarle Health, Western Carolina University, and University
Health Systems of Eastern Carolina Request for Merger of Pilot Program Projects,
WC Docket No. 02-60, Order,
DA 09-1696 (Wireline Comp. Bur. rel. July 31, 2009).
436 Western Carolina University merged with the North Carolina Telehealth Network. See id.
437 University Health Systems of Eastern Carolina merged with the North Carolina Telehealth Network. See id.
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LEAD STATE

PROJECT

STATUS

(Other States)

NM (AZ, TX, CO, Southwest Telehealth Access Grid

Active

CA, NV, UT)

NY

North Country Telemedicine Project

Active

NY

Western New York Rural Area Health Education Center

Active

NY

Adirondack-Champlain Telemedicine Information Network

Active

OH

Northeast Ohio Regional Health Information Organization

Active

OH

Southern Ohio Health Care Network

Active

OH
Holzer Consolidated Health Systems
Merged438

OR

Oregon Health Network

Active

PA

Geisinger Health System

Active

PA

Northwestern Pennsylvania Telemedicine Initiative

Active

PA (NY)

Northeast HealthNet

Active

PA

Pennsylvania Mountains Healthcare Alliance

Active

PA
Penn State Milton S. Hershey Medical Center
Missed 6/30/11 deadline

PA

Juniata Valley Network

Merged439

PR
Puerto Rico Health Department
Missed 6/30/11 deadline

SC

Palmetto State Providers Network

Active

SD (ND, IA, MN,

Heartland Unified Broadband Network

Active

NE, WY)

SD (IA, MN)

Sanford Health Collaboration and Communication Channel

Active

TN (VA)
Mountain States Health Alliance
Missed 6/30/11 deadline

TN (GA)

Erlanger Health System

Active

TN (KY)

Tennessee Telehealth Network

Active

TX

Texas Health Information Network Collaborative

Active

TX
Texas Healthcare Network
Merged440

UT

Utah Telehealth Network

Active

VA

Virginia Acute Stroke Telehealth Project

Active

WA
Association of Washington Public Hospital Districts
Missed 6/30/11 deadline

WI

St. Joseph's Hospital

Active

WI

Rural Wisconsin Health Cooperative ITN

Active

WV

West Virginia Telehealth Alliance

Active

WY

Wyoming Network for Telehealth (WyNETTE)

Active



438 Holzer Consolidated Health Systems merged with the Southern Ohio Health Care Network. See Rural Health
Care Mechanism, Holzer Consolidated Health Systems and Southern Ohio Health Care Network Request for
Merger of Rural Health Care Pilot Program Projects,
WC Docket No. 02-60, Order, 23 FCC Rcd 17396 (Wireline
Comp. Bur. 2008).
439 Juniata Valley Network merged with the Pennsylvania Mountains Healthcare Alliance. See Rural Health Care
Mechanism, Juanita Valley Network and Pennsylvania Mountains Healthcare Alliance Request for Merger of Rural
Health Care Pilot Program Projects,
WC Docket No. 02-60, Order, 24 FCC Rcd 10606 (Wireline Comp. Bur.
2009).
440 Texas Healthcare Network merged with the Texas Health Information Network Collaborative. See Rural Health
Care Support Mechanism, Texas Healthcare Network and Texas Health Information Network Collaborative Request
for Merger of Rural Health Care Pilot Program Projects,
WC Docket No. 0-2-60, Order, 24 FCC Rcd 4587
(Wireline Comp. Bur. 2009).
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APPENDIX B441

PILOT PROJECT DESCRIPTIONS AND GOALS

Project

Project Description

Project Goals

Adirondack-
ACTION has leased fiber/Ethernet services that provide the
Assist regional health care providers to increase access to an
Champlain
engineering, materials, construction, implementation, maintenance, and
information system that will be fully utilized to:
Telemedicine
sustaining network support for a dedicated, managed router/firewall
·
Improve patient safety (alert for medication errors, drug
Information
service over a secure fiber/Ethernet broadband network. The network
allergies, and emergency response);
Network
will provide 100 Mbps and 1 Gbps fiber/Ethernet and will also provide
·
Improve health care quality (make available complete electronic
(ACTION)
a 500Mb connection to the public Internet as part of this leased service.
medical records, test results and x-rays at the point of care,
integrate health information from multiple sources and
providers, incorporate the use of decision support tools with
guidelines and research results, etc.); and,
·
Create a health information system for the purpose of sharing
common patient medical information among ACTION members
to improve quality of care and maximize cost efficiencies.
Alaska eHealth
Comprised primarily of rural health care practitioners, the consortium
Improve broadband performance for 109 Alaskan health care
Network
will unify and increase the capacity of disparate health care networks
organizations to better facilitate health information exchange,
throughout Alaska in order to connect with urban health centers and
electronic health records (EHR) performance, digital imaging
access services in the lower 48 states. Approximately 270 facilities will solutions and telemedicine.
be connected.
Arizona Rural
New telecommunications connectivity for members of a health
·
Increase health telecommunications infrastructure in Cochise
Community
coalition in a rural county with little existing telecom infrastructure.
County, AZ.
Health
Once connectivity is established, ARCHIE members plan to create a
·
Initiate E-Health data sharing among health providers in Cochise
Information
health information exchange (HIE) to share clinical data across a large
County, with eventual inclusion of all health sectors (pharmacy,
Exchange
geographical area with small population centers. ARCHIE will
EMS, behavioral health).
(ARCHIE)
participate in telemedicine, distance learning, and public health data
·
Increase health data collection and surveillance utilizing public
accumulation as these services become available.
health systems, disease registries).


441 USAC May 5 Data Letter at App. A.
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Project

Project Description

Project Goals

Arkansas
Four existing networks will be consolidated and expanded using
·
Consolidate the state’s existing telehealth networks;
Telehealth
broadband connections to enable better patient care, including
·
Update and expand the statewide network to improve rural
Network
electronic records management, and coordinating responses to major
access;
public health incidents.
·
Connect to Internet2 and Arkansas’ dark fiber backbone, and
·
Schedule and manage the 24/7 needs of the statewide network
through a centralized management system.
Bacon County
A new 1 Gbps network will connect approximately 18 public and non-
The goals and purposes of the project are to provide improved health
Health Services,
profit health care facilities in rural and urban locations in Georgia to an
care to area residents, and to provide leadership in the development,
Inc.
existing network, enabling telemedicine services, distance education,
coordination and rationalization of health care services.
research, and effective disaster response.
California
CTN will connect over 800 California health care providers in
CTN’s goals are to advance the use of telecommunications and
Telehealth
underserved areas to a state- and nation-wide broadband network
health care technology and to significantly increase access to acute,
Network (CTN)
dedicated to health care.
primary and preventive health care in rural America.
Colorado Health
CHCC is a statewide, high speed private broadband network connecting Goals are to grow the network, create partnerships, enable telehealth,
Care
approximately 95 hospitals and clinics enabling telehealth and
and facilitate collaboration.
Connections
collaboration between state organizations.
(CHCC)
Communicare
A T1-based network connecting approximately 20 facilities
Establish point-to-point broadband links to Communicare service
specializing in mental health services will enable video consultation
sites for purpose of providing mental health services, including
and other videoconferencing applications.
telepsychiatry/therapy.
Erlanger Health
Erlanger will extend an existing fiber network to deliver patient care,
Improve rural access to a broader range of health care services.
System
video consultations, and data exchange, to approximately 10 health care
facilities serving residents in sparsely populated regions of southeast
Tennessee and smaller areas of northern Georgia, and western North
Carolina.
Frontier Access
A state-wide network, using T1 connections to a high speed backbone,
The goal of the FAhRM project is to support the continued
to Rural
will connect approximately 140 health care facilities to provide high
development and expansion of a reliable, cost effective telehealth
Healthcare in
definition videoconferencing, maintain electronic health records, and
network-of-networks that has sufficient, scalable bandwidth from
Montana
provide other services.
defined hubs to the cloud to support the increasing demands for the
(FAhRM)
delivery of health care applications in rural areas. The FAhRM pilot
project will provide for end to end networks allowing efficient,
seamless and dynamic routing of data from and between six hub-site
partners to 48 rural spoke-site entities.
Geisinger Health Existing network structures covering approximately 15 facilities will be To install a foundation of high speed bandwidth to multiple rural
System
enhanced and connected using high bandwidth connections to transfer
outlying hospitals then build multiple specialty telemedicine services
radiographs, improve electronic record systems, and enable other
over that foundation to accommodate rural residents and keep much
telemedicine services.
needed revenue at rural outlying hospitals.
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Project

Project Description

Project Goals

Greater
Is an affiliation of several existing health care networks in Minnesota
·
Create a cost effective and medical grade telehealth delivery
Minnesota
and North Dakota representing over 140 health care facilities that is
service infrastructure for both rural and urban health care
Telehealth
building a robust, reliable, and secure broadband network utilizing
facilities.
Broadband
broadband connections up to 1Gbps, MPLS technology, and a Network
·
Increase access to health care throughout the state and the
Initiative
Operating Center.
region.
·
Allow for statewide and regional health information exchange.
·
Promote technical standards and operational best practices to
reduce costs, boost performance, and improve ease-of-use of
telehealth applications.
Health
Establish a dedicated, robust fiber optic network with connections to at
·
Develop a fiber optic network to support electronic health
Information
least twenty-four participating sites to enable distance consultation,
records, health information exchange, remote digital imaging
Exchange of
electronic record keeping and exchange, disaster readiness, clinical
and telemedicine/telehealth.
Montana
research and distance education services. The new network will also
·
Provide network connections to support distance learning for
serve as a natural connection point to Internet2, UCAN and the
health care education programs.
Northern Tier Network.
Heartland
Existing networks will interconnect to a fiber-optic network of about
The expanded and enhanced network will address health problems of
Unified
180 facilities with connections to Internet2.
the area’s aging population, increase the use and quality of
Broadband
teleradiology and telehealth activities, and improve distance
Network
education programs.
Illinois Rural
This statewide network will serve approximately 87 health care
Participating health care providers will be able to meet new HIE and
HealthNet
facilities and connect to Internet2. More than 95% of the connected
HIT requirements, treat more patients, consult with specialists while
Consortium
locations will have connectivity at speeds ranging from 100 Mbps to 1
the patient is at the hospital, and send and receive radiological and
Gbps.
digital imaging expeditiously, such as mammograms and C-scans.
Indiana
The network will connect approximately 60 rural health care facilities
To improve the health and well-being of Indiana residents,
Telehealth
throughout Indiana, including approximately 20 of the 35 critical access particularly those in rural areas, through the utilization of a dedicated
Network
hospitals, several rural and urban hospitals, and approximately 30
broadband health network to deliver telehealth applications including
community mental health centers and rural health clinics providing
but not limited to telemedicine, health information exchange,
speeds from 5 mbps to 1 Gbps. The hospitals will serve as capacity
distance education and training, public health surveillance,
hubs connecting to smaller health facilities.
emergency preparedness, and trauma system development.
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Project

Project Description

Project Goals

Iowa Health
The new network connections will link approximately 78 health care
·
Enable health-care professionals to deliver better care to their
System
facilities, including 52 rural facilities, to an existing statewide,
patients.
dedicated, broadband health care network and National LambdaRail.
·
Whether it is through more effective sharing of medical
information, remote radiology, diagnostic services or any other
advanced tele-health application accessible over the network, the
goal is to provide health-care professionals a capability to
deliver better care.
·
Potentially connect to other regional networks around the
country, creating the footprint for a national health-care network
capability.
Iowa Rural
To provide last mile fiber connection for participating Iowa, Nebraska
·
Solve the problems of isolation, travel and limited resources that
Health
and South Dakota hospitals to the closest appropriate ICN Point of
constrain health care delivery in rural Iowa by providing
Telecommunicat
Presence (POP) with 1 gigabit Ethernet electronics connection from
increased bandwidth for clinical and administrative applications
ions Program
each hospital to one of 19 ICN aggregation points and using Internet
of the hospital’s choosing.
Protocol (IP)/Multiprotocol Label Switching (MPLS) electronics to
·
Leverage current proven Iowa Communication Network assets
connect the 19 aggregation points with a resilient (10) gigabit backbone
to extend broadband service to rural Iowa hospitals.
that creates a statewide health care network, service assurance, service
·
Improve access to and availability of clinical and administrative
level management, and customer reporting functions.
services, data and information.
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Project

Project Description

Project Goals

Kentucky
The network will connect community mental health facilities in
·
Plan a Kentucky state wide rural health care network that links
Behavioral
Appalachian southeastern Kentucky to major urban hospitals to
the existing statewide network of regional behavioral health
Telehealth
improve patient access to a full range of medical professionals.
providers with primary medical care providers and hospitals to
Network
Approximately 27 facilities will be connected.
improve access to a full range of medical care for persons with
co-morbid medical conditions.
·
Design a Kentucky statewide rural telehealth network that
seamlessly interfaces with existing state networks, makes uses of
existing capacity, in place resources and technology combined
with the best of new technologies using a design team of highly
qualified consulting systems and telecommunications engineers.
·
Establish a statewide telehealth network of behavioral health
care providers linking them to each other, primary medical care,
and specialty medical care resources that makes use of the
national Internet2 network if necessary, when appropriate and
available, utilize the Internet2 infrastructure, insuring maximum
available bandwidth for the benefit of those rural areas medically
underserved.
·
Implement, train and develop policies, procedures and clinical
protocols that guarantee a swift adoption of the new technology
as a resource to all members of the provider network.
·
Develop Implement and plan for network self sufficiency and
sustainability.
Louisiana
The Department will connect approximately 168 facilities, about 93 of
To promote access to telehealth and telemedicine applications.
Department of
which are rural, to a broadband network that will link public and
Hospitals
private health care providers to each other, enable patient access to
medical specialists, and provide rapid and coordinated crises responses.
Michigan Public
New network infrastructure will connect Michigan health care
·
To network eight rural hospitals in the Thumb area of Michigan
Health Institute
providers and health networks to each other and Internet2 at speeds
by building four towers and providing equipment for nine
ranging from 1.5 Mbps to 1 Gbps and higher. The network will
towers, with the system owned by the hospital consortium;
directly network well over 100 facilities, primarily rural and most
·
To network 72 health care providers throughout the state
located in underserved areas of the state.
(including two hospitals in the eight-hospital Thumb network)
via a secure, high-speed, health care-dedicated, MPLS network
owned and operated by the vendor; and
·
To create private fiber networks for four hospital systems
(covering a total of 34 sites).
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Project

Project Description

Project Goals

Missouri
The network will create a 2 Gbps statewide dedicated telehealth
·
N/A
Telehealth
backbone, enabling new telemedicine services including those requiring
Network
high-definition video streaming. The network will also add about 32
facilities to an existing network of approximately 127 facilities and
connect to Internet2.
New England
A multi-state telehealth network will deliver remote trauma
The goal of NETC is to augment health care services, health
Telehealth
consultation and expansive telemedicine by linking approximately 500
information exchange services, research, and education by enhancing
Consortium
primarily rural health care facilities – including hospitals, behavioral
broadband capacity and providing Internet2 services to support
health sites, correctional facility clinics, and community health care
existing programs and the implementation of more effective and
centers – in Vermont, New Hampshire and Maine to urban hospitals
sustainable telehealth and telemedicine services.
and universities throughout New England.
North Carolina
Regional network will connect approximately 100 health care facilities
Create and sustain a broadband network for health and care in NC
Telehealth
across North Carolina including public health clinics, free clinics,
focusing on public and non-profit providers.
Network
federally qualified community health centers (FQHCs), and hospitals.
North Country
A total of 27 health care facilities in a poor, sparsely populated region
·
Identify the health care needs of the community surrounding and
Telemedicine
of northern New York are connected via a leased fiber/Ethernet service
including Fort Drum, NY.
Project
that includes a 500Mb connection to the public Internet at speeds
·
Develop a plan to address and support the health care needs of
ranging from 10 to 100 Mbps. Expected services will include
the community utilizing telemedicine and telemedical education.
teledermatology, teleradiology, diabetes, CME and telepsychiatry
·
Foster a platform for the collection and exchange of information
through video conferencing and education. The network serves the
to promote health through coordinated, area-wide health services
region surrounding Fort Drum, home to the most deployed soldiers in
programs.
the United States Army.
Northeast
The current approved application was for 21 entities of which
The goals of the program are to enhance the current exchange of
HealthNet
approximately 75% are connected. This includes a composition of both health care information as well as to further develop clinical
urban and rural health care settings and provides for the access of
education and telehealth initiatives.
diagnostic and clinical information.
80

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Project

Project Description

Project Goals

Northeast Ohio
The expansion of an existing network to connect approximately 16
·
Make all necessary health care information available to patients
Regional Health
medical facilities at speeds ranging from 100 Mbps to 1 Gbps. The
and providers where it is needed, when it is needed.
Information
expansion is predominantly within the Northeast Ohio geography.
·
Provide a secure, confidential, patient-controlled environment
Organization
for health information exchange.
·
Provide opportunities for patients to more actively participate in
their health care.
·
Reduce duplicative testing, administrative burdens, and other
barriers to cost-effective health care.
·
Enable health care research using de-identified data.
·
Reduce disparities in health care.
·
Provide transparency to enhance quality assessment and value
comparison.
·
Enhance the economic viability of the region.
Northwest
This broadband network links six community mental health centers
Project goals are to provide telepsychiatry, VOIP, data and internet
Alabama Mental
with the Walker Baptist Medical Center. Five network sites have 15
services over the broadband network.
Health Center
Mbps service and two sites have 100 Mbps service.
Northwestern
This project was designed to bring much needed specialty care to rural
·
To improve access to a broad range of nationally recognized
Pennsylvania
communities so that travel and time off from work may be minimized.
medical specialty services and help provide standardization of
Telemedicine
With telemedicine, the community hospitals may be able to stop the
care for patients.
Initiative
migration of many patients (and subsequently revenue) to the larger
·
To encourage physicians, nurse, and allied health professionals
tertiary care facilities. The technology was also to assist in the
to establish practices and services and remain in the rural
recruitment and retention of physicians for the rural communities.
communities
·
To increase public safety and promote the cooperation of smaller
community hospitals to share services.
Oregon Health
The network is a “hub & spoke” model that requires all approved
·
Build the core network infrastructure and participant base
Network (OHN)
telecommunications vendors to peer at a central exchange point
footprint necessary to build the value and momentum needed to
(Northwest Access Exchange), and who agree to live up to OHN’s
support a sustainable statewide health care network.
strict service level agreements (SLA’s). OHN’s network configuration
·
Provide as much middle-mile infrastructure as possible
and SLAs provide the connectivity infrastructure required to support
throughout Oregon to eventually drop the barrier to entry (cost)
current and future health care applications that serve the next
for the expanded health care community to join the OHN. In
generation of patient-centered care and health care education.
addition this infrastructure allows all Oregonians potential
access to broadband including schools and business fostering
economic growth.
·
Ensure that all our participants are effectively using OHN to
serve the Triple Aim goals of Centers for Medicare & Medicaid
Services (CMS).
81

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Project

Project Description

Project Goals

Pacific
Project will link approximately 96 health care facilities throughout
·
To interconnect health care organizations throughout the State of
Broadband
Hawaii and the Pacific Island region to serve a population that spans 11
Hawaii and the Pacific Islands region to a broadband telehealth
Telehealth
islands.
network that will enable clinicians and support staff to improve
Demonstration
the delivery of health care services to rural, remote, and
Project
underserved populations.
·
The network will facilitate many telehealth, telemedicine,
clinical, and health related education and training services, and
expand the network of service providers through the Internet2.
Palmetto State
Connects four rural and underserved regions to a fiber optic backbone
·
Connect all RHC eligible hospitals, clinics and health care
Providers
being developed in the state and Internet2. FQHC providers will also
providers throughout the state.
Network
be added to the network. Network will connect approximately 58
·
Provide a high quality, high speed, fully redundant network to
facilities at speeds ranging from 10 Mbps to 10 Gbps.
the HCPs of the state.
·
Provide health care support to underserved areas with specific
emphasis on rural counties.
·
Support telemedicine, telehealth and Health Information
Exchange needs for all participants.
Pathways
Not-for-profit community mental health center will connect
To provide clinical and psychiatric care to the rural areas in the state
Community
approximately 15 outlying offices to its headquarters. The dedicated
of Missouri.
Behavioral
T1 network will extend outreach to the current population served, and
Healthcare, Inc.
reduce the costs of recruiting physicians to relocate in rural areas.
Pennsylvania
New broadband network proposed by a consortium of approximately
Facilitate:
Mountains
21 hospitals in rural central and western Pennsylvania will provide a
·
Acquisition of bulk Internet services for hospitals and clinics;
Healthcare
variety of telemedicine services, telehealth services, shared HCIS, and
·
Health information exchange for rural hospitals and clinics;
Alliance
health care information exchange in more than 20 counties. Network
·
Telemedicine, telehealth and other shared resources for back
will provide a minimum of 10 Mbps service.
office integration;
·
Shared health care information system implementations reducing
cost for critical access hospitals.
Rocky Mountain Statewide, high speed private broadband network connecting
Goals are to grow the network, create partnerships, enable telehealth,
HealthNet
approximately 105 mental health centers enabling telehealth and
and facilitate collaboration.
collaboration between state organizations.
Rural Nebraska
Consortium of nine rural hospitals and related clinics will upgrade a
·
Improve quality of care and patient safety;
Healthcare
patchwork of T-1 lines with an advanced fiber network. Network will
·
Enable the exchange of health information;
Network
provide speeds of up to 2 Gbps for a variety of telehealth and
·
Promote the vision of a system of care for Western Nebraska;
telemedicine services in an underserved rural area.
·
Integrate electronic medical records with other systems;
·
Expand the use of telehealth and telemedicine.
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Project

Project Description

Project Goals

Rural Western
New, high-speed fiber optic cable network will serve approximately 80
To provide broadband access to underserved health care facilities in
and Central
health care facilities.
Central and Western Maine.
Maine
Broadband
Initiative
Rural Wisconsin
Will augment an existing shared electronic health records project by
·
Provide high speed, redundant WAN connectivity for facilities
Health
providing network management/systems and redundant connectivity
and clinics participating in a RWHC ITN Shared EHR Initiative;
Cooperative ITN from participating hospitals to 2 consortium datacenters, as well as
·
To provide redundant connectivity between the redundant
(RWHC ITN)
higher speeds that will range from 20 to 100 Mbps.
hospital-consortium data centers; and
·
To implement WAN management and security features to
maximize uptime.
Sanford Health
Project will connect seven existing networks at speeds of up to 100
·
Increase bandwidth to our locations that need increased
Collaboration
Mbps to access administrative services and connect with educational
bandwidth;
and
institutions. Facilities served include the Aberdeen, S.D. area Indian
·
Increase failover technology for our locations;
Communication
Health Services.
·
Improve network design.
Channel
Southern Ohio
Project will provide approximately 60 facilities with next-generation
To provide approximately 120 health care facilities in 13 counties
Health Care
telemedicine, education, and interconnection with statewide emergency
with next-generation telemedicine, education, and interconnection
Network
networks and Internet2 by building or purchasing fiber optic rings
with statewide emergency networks and Internet2.
covering 315 miles. Will also provide connectivity to facilities outside
the reach of the fiber optic rings.
Southwest
Network will connect with Internet2 and provide voice, video and data
N/A
Alabama Mental
transmission capabilities to approximately 31 mental health facilities
Health
serving 16 counties. Connection speeds range from 3 to 100 Mbps.
Consortium
Southwest
This collaboration of several health care organizations being lead by the Create a network of networks that provides sustainable, affordable
Telehealth
UNM CfTH, includes UNM Hospital and Health Sciences Center,
broadband that supports health care; telemedicine, eHealth, in order
Access Grid
Presbyterian Health Systems, Primary Care Association, San Juan
to improve access to health care services, improve health outcomes,
Regional Medical Center, Carlsbad Behavioral Health Services, the
and reduce costs in our region and across the nation.
Albuquerque Area Indian Health Services, and stakeholders in the
Navajo Nation; Ft. Defiance, Winslow, and Hardrock service units.
Other participants include LCF Research and the Arizona Telemedicine
Program. This enhanced broadband network will link hundreds of
health care sites and provide the critical infrastructure to support access
to telemedicine services, health education, training, research and health
information exchange.
83

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Project

Project Description

Project Goals

St. Joseph's
St. Joseph's Hospital RHCPP consortium is building a broadband
·
Increase access to health services in rural and underserved
Hospital
network in Western Wisconsin with to enable a streamlined delivery of
communities.
telehealth services between providers. Project will link two existing
·
Improve the health care services in the area by providing timely
fiber systems in the city of Chippewa Falls to the hospital, two other
access to health care specialists through the use of telehealth
facilities and Internet2 in order to expand telemedicine offerings.
services by linking urban health care providers with rural
hospitals.
Tennessee
Will build on and expand the existing Tennessee Information
Develop a robust telehealth network throughout the state of
Telehealth
Infrastructure to serve approximately 450 facilities. Connects to
Tennessee.
Network
Internet2; will support diabetes research involving three state research
centers.
Texas Health
Will expand and improve an existing network serving approximately 40 ·
Provide an interoperable, secure, scalable and cost effective
Information
primarily rural health care facilities at speeds of at least 45 Mbps.
medical grade broadband network to health care facilities in
Network
order to connect rural health providers to urban and regional
Collaborative
centers so that they may expand health care access, improved
services, health information exchange and other services across
the entire state of Texas.
·
Future goals include allowing physicians and health care
consumers use the network to collect health information in the
home and wherever the patient may be.
Utah Telehealth
The project will upgrade and expand an existing network to serve
·
The expansion of telehealth and telemedicine;
Network
hospitals, clinics, FQHCs, and public health departments throughout
·
Adoption of health information technology and health
Utah. The network will utilize dedicated Ethernet via fiber optics and
information exchange;
microwave to provide high speed broadband and improve network
·
Foster collaboration to improve patient care;
reliability. Originally entitled the Utah ARCHES Project, the purpose
·
Improve training and education for health care professionals.
of the project remains to Advance Rural Connections for Healthcare
and E-health Services.
Virginia Acute
Further the deployment of broadband in support of a tele-stroke project. Maximize use of FCC Pilot Program funding to bring broadband
Stroke
Emphasis is on underserved areas where broadband is lacking (Eastern
communications to rural and under served areas of the
Telehealth
Shore and the Northern Neck, Middle Peninsula) and those areas that
Commonwealth.
Project
have a strong desire for a tele-stroke project.
West Virginia
Statewide network will connect approximately 450 facilities to improve ·
To complete bandwidth upgrades;
Telehealth
connectivity for rural health centers. Project is focused on regions of
·
Provide guidance to network participants in furthering their
Alliance
the state with historically high concentrations of poor and elderly
Telehealth IQ and assist them to meet each organization's goals
individuals suffering from chronic medical conditions. Will connect to
by being a conduit of information to those ends.
Internet2; speeds range from T1 lines at 1.5 Mbps to 1 Gbps fiber.
84

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Project

Project Description

Project Goals

Western New
Network will connect about 40 facilities in rural and urban areas with
·
Creating regional telehealth network;
York Rural Area
varying speeds from 10 - 800 Mbps based on facility need in order to
·
Provide high speed internet connections at an affordable cost;
Health
provide access to experienced specialty physicians and critical life-
·
Providing health care and health care education on dedicated
Education
saving treatments.
broadband network;
Center
·
Connecting those who have with those who need.
Wyoming
Will help alleviate Wyoming’s severe shortage of health care providers
·
Provide high-speed connectivity to participating sites using
Network for
and reduce the need for the state’s significant rural population to drive
existing copper connections.
Telehealth
long distances for health care by connecting 37 hospitals, primary care
·
Encourage use of telecommunications to support collaboration
(WyNETTE)
clinics, community mental health centers and substance abuse centers.
among health care providers in Wyoming.
Connects with Internet2.
85

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APPENDIX C

PILOT PROJECT COMPOSITION BY HCP TYPE442

Not-For-Profit

Community

Community

Local

Hospital /

Rural Health Teaching Hospital,

/ Migrant

Mental

Health

Dedicated ER

Clinic or

Medical School,

Health

Health

Department

of Rural, For-

Urban

Post-Secondary

Project Name

Center

Center

or Agency

Profit Hospital

Equivalent

Institution

Adirondack-Champlain
Telemedicine
4
11
33
Information Network
Alaska eHealth
Network
Arizona Rural
Community Health
1
2
1
Information Exchange
Arkansas Telehealth
1
Network
Bacon County Health
14
4
Services, Inc.
California Telehealth
75
26
59
1
Network
Colorado Health Care
31
50
9
Connections
Communicare
8
Erlanger Health System
9
Frontier Access to Rural
Healthcare in Montana
1
1
39
6
(FAhRM)
Geisinger Health
7
20
System
Greater Minnesota
Telehealth Broadband
10
5
1
Initiative
Health Information
1
10
6
2
Exchange of Montana
Heartland Unified
10
2
35
24
Broadband Network
Illinois Rural HealthNet
12
66
16
Consortium
Indiana Telehealth
6
9
27
5
Network
Iowa Health System
3
2
26
61
Iowa Rural Health
Telecommunications
88
Program


442 USAC Aug. 9 Data Letter at App. G (explaining that the composition of the Alaska eHealth Network and New
England Telehealth Consortium are not fully reflected because as of Jan. 31, 2012, they only had funding
commitments for network design studies, which were allocated to “Consortium of the Above” and not included in
the table).
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Not-For-Profit

Community

Community

Local

Hospital /

Rural Health Teaching Hospital,

/ Migrant

Mental

Health

Dedicated ER

Clinic or

Medical School,

Health

Health

Department

of Rural, For-

Urban

Post-Secondary

Project Name

Center

Center

or Agency

Profit Hospital

Equivalent

Institution

Kentucky Behavioral
1
Telehealth Network
Louisiana Department
1
of Hospitals
Michigan Public Health
27
8
9
25
14
Institute
Missouri Telehealth
26
16
35
17
Network
New England
Telehealth Consortium
North Carolina
3
52
23
3
Telehealth Network
North Country
6
4
2
12
4
Telemedicine Project
Northeast HealthNet
4
18
Northeast Ohio
Regional Health
16
Information
Organization
Northwest Alabama
6
1
Mental Health Center
Northwestern
Pennsylvania
4
3
Telemedicine Initiative
Oregon Health Network
8
17
35
82
14
Pacific Broadband
Telehealth
7
8
Demonstration Project
Palmetto State
39
46
65
5
Providers Network
Pathways Community
Behavioral Healthcare,
16
2
Inc.
Pennsylvania
Mountains Healthcare
19
Alliance
Rocky Mountain
102
1
HealthNet
Rural Nebraska
5
10
22
Healthcare Network
Rural Western and
Central Maine
2
4
3
Broadband Initiative
Rural Wisconsin Health
4
2
Cooperative ITN
Sanford Health
Collaboration and
13
21
Communication
Channel
87

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Not-For-Profit

Community

Community

Local

Hospital /

Rural Health Teaching Hospital,

/ Migrant

Mental

Health

Dedicated ER

Clinic or

Medical School,

Health

Health

Department

of Rural, For-

Urban

Post-Secondary

Project Name

Center

Center

or Agency

Profit Hospital

Equivalent

Institution

Southern Ohio
17
25
11
18
16
Healthcare Network
Southwest Alabama
Mental Health
23
Consortium
Southwest Telehealth
6
5
Access Grid
St. Joseph's Hospital
4
Tennessee Telehealth
3
1
Network
Texas Health
Information Network
1
Collaborative
Utah Telehealth
11
14
16
11
1
Network
Virginia Acute Stroke
1
Telehealth Project
West Virginia
59
31
2
3
Telehealth Alliance
Western New York
Rural Area Health
11
23
2
Education Center
Wyoming Network for
16
16
4
1
Telehealth (WyNETTE)
88

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APPENDIX D

LIST OF WINNING VENDORS*

Access Integration Specialists
Frontier Telenet
A-D Technologies - Duraline DBA or Arnco
Frontier West Virginia Inc.
Corporation FKA
Fujitsu Network Communications, Inc.
ADVA Optical Networking NA, Inc. - ADVA
G4S Technology, LLC - Adesta, LLC
Optical Networking
GCI Communication Corp
Alamon Telco, Inc.
GNJ Construction LLC
Alcatel-Lucent USA, Inc
Great Basin Electronics, Inc. - Great Basin
Alexander Open Systems, Inc.
Electronics
Allo Communications LLC
Great Lakes Comnet, Inc.
Alma Telephone Company, Inc.
Gudenkauf Corporation
Alpine Communications, LC
Hancock Rural Telephone Corporation - DBA
AT&T Corp.
NineStar Connect
BellSouth Telecommunications, LLC
Hawaiian Telcom, Inc.
Blackfoot Communications, Inc.
Hospers Telephone Exchange Inc. - HTC
BNSF Railway Company
Communications
Brainstorm Internet, Inc.
iConnects Montana LLC
Bresnan Communications, LLC - dba Optimum
Illinois Century Network - Central Management
West
Services
BT Conferencing Video Inc
Illinois Municipal Broadband Communications
CCI Systems, Inc.
Association
CDW Government, LLC
Indiana Fiber Network LLC
CenturyLink
Information Transport Solutions, Inc.
Charter Communications - Charter Business and
Inland Development Corporation
Charter Fiberlink
INOC, LLC
Ciena Corporation
Integra Telecom of Oregon, Inc.
Citizens Mutual Telephone Company
INX Inc.
Citizens Telecomm Co. Of Utah dba Frontier
Knology of the Black Hills, LLC
CoastCom, Inc
Last Mile Inc - Sting Communications
Comcast Business Communications
Lightspeed Networks
Communication Innovators Inc.
Long Lines Metro, LLC
Communication Technologies, Inc.
Lumos Networks of West Virginia Inc
Conterra Ultra Broadband, LLC
MapleNet Wireless, Inc.
Cox Communications Hampton Roads, LLC
MasTec North America
CTSI, LLC, dba Frontier Communications,
MCC Telephony, LLC
CTSI Company
McLeodUSA Telecommunications. - DBA
Cyan Optics
PAETEC Business Services
Development Authority of the North Country
MCNC
Digicorp, Inc.
Midcontinent Communications
Douglas Services Inc
Miles Communications, Inc. - dba Enhanced
Eastern Oregon Telecom, LLC
Telecommunications Corp.
Easy Street Online Services, Inc.
Multilink, Inc.
EDI, Ltd
Muscatine Power & Water
Electric Power Board of Chattanooga
Mutual Telephone Company - Premier
Enventis Telecom, Inc.
Communications
FiberNet, LLC
Northern Illinois University
Flathead Electric Cooperative, Inc.
OFS Fitel, LLC
FRC, LLC
OneCommunity
Frontier Communications of Minnesota, Inc.
Pacific Lightnet, Inc. - Wavecom Solutions
89

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PAETEC Communications, Inc.
Technology - Iowa Communications Network
Peninsula Fiber Network LLC
Texcel Inc.
PenTeleData Limited Partnership I
The Chillicothe Telephone Company - Horizon
Perry-Spencer Rural Tel Coop Inc - dba PSC
Chillicothe Telephone Company
Professional Information Networks - ProInfoNet
Thumb Radio Inc
Pulaski White Rural Telephone Cooperative,
Time Warner Cable Information Services
Incor
Tribal One Broadband Technologies, LLC -
Quantum Communications, LLC
ORCA Communications
Rochester Telephone Co., Inc.
TriLightNET LLC
Ronan Telephone Company
University Corporation for Advanced Internet
Rural Wisconsin Health Cooperative
Development - Internet2
Saint Vincent Health Center - SVHC
Verizon Network Integration Corp.
Information Technology Network Services
Vision Net, Inc - Montana Advanced
Sho-Me Technologies, LLC
Information Network, Inc.
Sjoberg's, Inc. - Sjoberg's Cable TV, Inc
West Alabama T.V. Cable Company Inc
Smithville Digital, LLC
Westelcom Networks Inc
Sorrento Networks, Inc.
Western Fibernet, LLC
South Dakota Network, LLC - DBA's-SDN
Windstream Communications, Inc.
Communications SDN Technologies
WiscNet
Southwestern Bell Telephone Company - AT&T
Wisconsin Bell, Inc. - AT&T Wisconsin
Southwest
Zayo Enterprise Networks LLC - ZEN
Spencer Municipal Communications Utility
Zito Media Voice, LLC
State of Iowa, Iowa Telecommunication &
* Source: USAC May 4 USAC Data Letter, App. C.
90

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APPENDIX E

LIST OF EX PARTE

FILINGS AND CITATIONS

DATE

ABBREVIA

OF

SHORT

PARTY

TION

FILING

CITE

FULL CITE

Universal Service
USAC
Feb. 23,
USAC Feb. Letter from William England, Vice President, Rural Health Care
Administrative Company
2010
23 Letter
Division, USAC, to Marlene H. Dortch, Secretary, Federal
Communications Commission, WC Docket No. 02-60 (filed Feb. 23,
2010) (USAC Feb. 23 Letter).
Health Information
HIEM
Sept. 22,
HIEM
Letter from David LaFuria, Counsel for Health Information Exchange
Exchange of Montana
2010
Sept. 22 Ex of Montana, to Marlene H. Dortch, Secretary, WC Docket No. 02-60
Parte
(Sept. 22, 2010) (HIEM Sept. 22 Ex Parte Letter).
Letter
National Rural Health
NRHA
Dec. 21,
NRHA
Letter from Christianna Lewis Barnhart, Attorney Advisor, Federal
Association
2011
Dec. 21 Ex
Communications Commission, to Marlene H. Dortch, Secretary,
Parte
Federal Communications Commission, WC Docket No. 02-60 (filed
Letter
Dec. 21, 2011) (NRHA Dec. 21 Ex Parte Letter).
National Rural Health
NRHRC
Dec. 27,
NRHRC
Letter from Chin Yoo, Attorney Advisor, Federal Communications
Resource Center
2011
Dec. 27 Ex
Commission, to Marlene H. Dortch, Secretary, Federal
Parte
Communications Commission, WC Docket No. 02-60 (filed Dec. 27,
Letter
2011) (NRHRC Dec. 27 Ex Parte Letter).
U.S. Department of Health
ONC
Jan. 6,
ONC Jan.
Letter from Linda L. Oliver, Attorney Advisor, Federal
Information Services,
2012
6 Ex Parte
Communications Commission, to Marlene H. Dortch, Secretary,
Office of the National
Letter
Federal Communications Commission, WC Docket No. 02-60 (filed
Coordinator for Health
Jan. 6, 2012) (ONC Jan. 6 Ex Parte Letter).
Information Technology
91

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DATE

ABBREVIA

OF

SHORT

PARTY

TION

FILING

CITE

FULL CITE

U.S. Department of Health
ONC
Jan. 17,
ONC Jan.
Letter from Linda L. Oliver, Attorney Advisor, Federal
Information Services,
2012
17 Ex
Communications Commission, to Marlene H. Dortch, Secretary,
Office of the National
Parte
Federal Communications Commission, WC Docket No. 02-60 (filed
Coordinator for Health
Letter
Jan. 17, 2012) (ONC Jan. 17 Ex Parte Letter).
Information Technology,
and Hank Fanberg of
CHRISTUS Health
Palmetto State Providers
PSPN
Jan. 31,
PSPN Jan.
Letter from Jeffrey Mitchell, Counsel for FRC, LLC, on behalf of FRC
Network
2012
31 Ex
and PSPN, to Marlene Dortch, Secretary, FCC, WC Docket No. 02-60
Parte
(filed Jan. 31, 2012) (PSPN Jan. 31 Ex Parte Letter).
Letter
Universal Service
USAC
Feb. 17,
USAC Feb. Letter from Craig Davis, Vice President of Rural Health Care, USAC,
Administrative Company
2012
17 Letter
to Sharon Gillett, Chief, WCB, WC Docket No. 02-60 (filed February
17, 2012) (USAC Feb. 17 Letter).
Palmetto State Providers
PSPN
Feb. 23,
PSPN Feb.
Letter from W. Roger Poston II, Palmetto State Providers Network, to
Network
2012
23 Ex
Christianna Lewis Barnhart, Attorney Advisor, Federal
Parte
Communications Commission, WC Docket No. 02-60 (filed Feb. 23,
Letter
2012) (PSPN Feb. 23 Ex Parte Letter).
Oregon Health Network
OHN
Feb. 28,
OHN Feb.
Letter from Kim Klupenger et al., Oregon Health Network, Christianna
2012
28 Ex
Lewis Barnhart, Attorney Advisor, Federal Communications
Parte
Commission, WC Docket No. 02-60 (filed Feb. 28, 2012) (OHN Feb.
Letter
28 Ex Parte Letter).
Rocky Mountain HealthNet
RMHN
Feb. 28,
Colorado
Letter from George DelGrosso, Rocky Mountain HealthNet, and
Colorado Health Care
CHCC
2012
Feb. 28 Ex
Steven Summer, Colorado Health Care Connections, to Network, to
Connections
Parte
Christianna Lewis Barnhart, Attorney Advisor, Federal
Letter
Communications Commission, WC Docket No. 02-60 (filed Feb. 28,
2012) (Colorado Feb. 28 Ex Parte Letter).
92

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DATE

ABBREVIA

OF

SHORT

PARTY

TION

FILING

CITE

FULL CITE

Pilot Project Group Call
PMHA
Mar. 13,
Pilot
Letter from Christianna Lewis Barnhart, Attorney Advisor, Federal
(Pennsylvania Mountains
PSPN
2012
Conference Communications Commission, to Marlene H. Dortch, Secretary,
Health Care Alliance,
NCTN
Call Mar.
Federal Communications Commission, WC Docket No. 02-60 (filed
Palmetto State Providers
CHCC
13 Ex
Mar. 13, 2012) (Pilot Conference Call Mar. 13 Ex Parte Letter (PMHA
Network, North Carolina
RMHN
Parte
et al.)).
Telehealth Network,
Letter
Colorado Health Care
(PMHA et
Connections, Rocky
al.)
Mountain HealthNet)
Universal Service
USAC
Mar. 14,
USAC
Letter from Craig Davis, Vice President, Rural Health Care Division,
Administrative Company
2012
Observa-
Universal Service Administrative Company, to Sharon Gillett, Chief,
tions Letter
Wireline Competition Bureau, Federal Communications Commission,
WC Docket No. 02-60 (filed Mar. 14, 2012) (USAC Observations
Letter).
Pilot Project Group Call
ARCHIE
Mar. 16,
Pilot
Letter from Linda L. Oliver, Attorney Advisor, Federal
(Arizona Rural Community
Erlanger
2012
Conference Communications Commission, to Marlene H. Dortch, Secretary,
Health Information
KBTN
Call Mar.
Federal Communications Commission, WC Docket No. 02-60 (filed
Exchange, Erlanger Health
16 Ex
Mar. 16, 2012) (Pilot Conference Call Mar. 16 Ex Parte Letter
System, Kentucky
Parte
(ARCHIE et al.)).
Behavioral Telehealth
Letter
Network)
(ARCHIE
et al.)
93

Federal Communications Commission

DA 12-1332

DATE

ABBREVIA

OF

SHORT

PARTY

TION

FILING

CITE

FULL CITE

Universal Service
USAC
Mar. 16,
USAC
Letter from Craig Davis, Vice President, Rural Health Care Division,
Administrative Company
2012
Mar. 16
Universal Service Administrative Company, to Sharon Gillett, Chief,
Site Visit Summary
Site Visit
Wireline Competition Bureau, Federal Communications Commission,
(Northeast Ohio Regional
Reports
WC Docket No. 02-60 (filed Mar. 16, 2012) (USAC Mar. 16 Site Visit
Health Information
Reports).
Network, Heartland
Unified Broadband
Network, PSPN, Iowa
Rural Health
Telecommunications
Program, PMHA)
National Association of
NARHC
Mar. 26,
NARHC
Letter from Chin Yoo, Attorney Advisor, Federal Communications
Rural Health Clinics
2012
Mar. 26 Ex Commission, to Marlene H. Dortch, Secretary, Federal
Parte
Communications Commission, WC Docket No. 02-60 (filed Mar. 26,
Letter
2012) (NARHC Mar. 26 Ex Parte Letter).
Pilot Project Group Call
AEN
Mar. 26,
Pilot
Letter from Linda L. Oliver, Attorney Advisor, Federal
(Alaska eHealth Network,
SWTAG
2012
Conference Communications Commission, to Marlene H. Dortch, Secretary,
Southwest Telehealth
TTN
Call Mar.
Federal Communications Commission, WC Docket No. 02-60 (filed
Access Grid, Tennessee
VAST
26 Ex
Mar. 26, 2012) (Pilot Conference Call Mar. 26 Ex Parte Letter (AEN et
Telehealth Network,
THINC
Parte
al.)).
Virginia Acute Stroke
Letter
Telehealth Project, Texas
(AEN et
Health Information
al.)
Network Collaborative)
94

Federal Communications Commission

DA 12-1332

DATE

ABBREVIA

OF

SHORT

PARTY

TION

FILING

CITE

FULL CITE

Pilot Project Group Call
WNYRAHEC
Mar. 26,
Pilot
Letter from Linda Oliver, Attorney Advisor, Federal Communications
(Western New York Rural
St. Joseph’s
2012
Conference Commission, to Marlene H. Dortch, Secretary, Federal
Area Health Education
Sanford
Call Mar.
Communications Commission, WC Docket No. 02-60 (filed Mar. 26,
Center, St. Joseph’s
OHN
26 Ex
2012) (Pilot Conference Call Mar. 26 Ex Parte Letter (WNYRAHEC et
Hospital, Sanford Health
Geisinger
Parte
al.)).
Collaboration and
Bacon County
Letter
Communication Channel,
(WNYRA
Oregon Health Network,
HEC et al.)
Geisinger Health System,
Bacon County Health
Services, Inc.)
Palmetto State Providers
PSPN
Mar. 27,
PSPN Mar. Letter from W. Roger Poston II, Palmetto State Providers Network, to
Network
2012
27 Ex
Sharon Gillett, Chief, Wireline Competition Bureau, Federal
Parte
Communications Commission, WC Docket No. 02-60 (filed Mar. 27,
Letter
2012) (PSPN Mar. 27 Ex Parte Letter).
National State Offices of
NOSORH
Mar. 28,
NOSORH
Letter from Christianna Lewis Barnhart, Attorney Advisor, Federal
Rural Health
2012
Mar. 28 Ex Communications Commission, to Marlene H. Dortch, Secretary,
Parte
Federal Communications Commission, WC Docket No. 02-60 (filed
Letter
Mar. 28, 2012) (NOSORH Mar. 28 Ex Parte Letter).
John Gale, Maine Rural
John Gale
Mar. 29,
John Gale
Letter from Linda L. Oliver, Attorney Advisor, Federal
Health Research Center
2012
Mar. 29 Ex Communications Commission, to Marlene H. Dortch, Secretary,
Parte
Federal Communications Commission, WC Docket No. 02-60 (filed
Letter
Mar. 29, 2012) (John Gale Mar. 29 Ex Parte Letter).
95

Federal Communications Commission

DA 12-1332

DATE

ABBREVIA

OF

SHORT

PARTY

TION

FILING

CITE

FULL CITE

Cabarrus Health Alliance
Cabarrus
Apr. 9,
Cabarrus
Comments of Cabarrus Health Alliance, Kirby Information
Health
2012
Health
Management Consulting, LLC, Microelectronics Center of North
Alliance
Alliance et
Carolina, NC Association of Local Public Health Directors, NC
al.
Institute for Public Health, North Carolina Hospital Association, WC
Comments
Docket No. 02-60 (filed Apr. 9, 2012) (Cabarrus Health Alliance et al.
Comments)
U.S. Department of Health
ORHP
Apr. 10,
ORHP
Letter from Christianna Lewis Barnhart, Attorney Advisor, Federal
Information Services,
2012
Apr. 10 Ex
Communications Commission, to Marlene H. Dortch, Secretary,
Office of Rural Health
Parte
Federal Communications Commission, WC Docket No. 02-60 (filed
Policy
Letter
April 10, 2012) (ORHP Apr. 10 Ex Parte Letter).
Universal Service
USAC
Apr. 12,
USAC
Letter from Craig Davis, Vice President, Rural Health Care Division,
Administrative Company
2012
Needs
Universal Service Administrative Company, to Sharon Gillett, Chief,
Assessmen
Wireline Competition Bureau, Federal Communications Commission,
t
WC Docket No. 02-60 (filed Apr. 12 2012) (USAC Needs
Assessment).
Universal Service
USAC
Apr. 27,
USAC
Letter from Craig Davis, Vice President, Rural Health Care Division,
Administrative Company
2012
Apr. 27
Universal Service Administrative Company, to Sharon Gillett, Chief,
Site Visit Summary
Site Visit
Wireline Competition Bureau, WC Docket No. 02-60 (filed Apr. 27,
(NCTN, Bacon County)
Reports
2012) (USAC Apr. 27 Site Visit Reports).
Universal Service
USAC
May 4,
USAC
Letter from Craig Davis, Vice President, Rural Health Care Division,
Administrative Company
2012
May 4
Universal Service Administrative Company, to Sharon Gillett, Chief,
Data Letter
Wireline Competition Bureau, Federal Communications Commission,
WC Docket No. 02-60 (filed May 4, 2012) (USAC May 4 Data Letter).
96

Federal Communications Commission

DA 12-1332

DATE

ABBREVIA

OF

SHORT

PARTY

TION

FILING

CITE

FULL CITE

Universal Service
USAC
May 30,
USAC
Letter from Craig Davis, Vice President, Rural Health Care Division,
Administrative Company
2012
May 30
Universal Service Administrative Company, to Sharon Gillett, Chief,
Data Letter
Wireline Competition Bureau, Federal Communications Commission,
WC Docket No. 02-60 (filed May 30, 2012) (USAC May 30 Data
Letter).
University of Virginia,
UVA
June 8,
UVA June
Letter from Elizabeth McCarthy, Attorney Advisor, Federal
VAST Network
2012
8 Ex Parte
Communications Commission, to Marlene H. Dortch, Secretary,
Federal Communications Commission, WC Docket No. 02-60 (filed
June 8, 2012) (UVA June 8 Ex Parte Letter).
Universal Service
USAC
June 27,
USAC
Letter from Craig Davis, Vice President, Rural Health Care Division,
Administrative Company
2012
June 27
Universal Service Administrative Company, to Sharon Gillett, Chief,
Data Letter
Wireline Competition Bureau, Federal Communications Commission,
WC Docket No. 02-60 (filed June 27, 2012) (USAC June 27 Data
Letter).
Universal Service
USAC
July 19,
USAC
Letter from Craig Davis, Vice President of Rural Health Care, USAC,
Administrative Company
2012
Critical
to Julie Veach, Chief, WCB, WC Docket No. 02-60 (filed Jul. 19,
Access
2012) (USAC Critical Access Hospitals Report).
Hospitals
Report
Universal Service
USAC
Aug. 2,
USAC
Letter from Craig Davis, Vice President, Rural Health Care Division,
Administrative Company
2012
Aug. 2
Universal Service Administrative Company, to Julie Veach, Chief,
Data Letter
Wireline Competition Bureau, Federal Communications Commission,
WC Docket No. 02-60 (filed Aug. 2, 2012) (USAC Aug. 2 Data
Letter).
97

Federal Communications Commission

DA 12-1332

DATE

ABBREVIA

OF

SHORT

PARTY

TION

FILING

CITE

FULL CITE

Universal Service
USAC
Aug. 9,
USAC
Letter from Craig Davis, Vice President, Rural Health Care Division,
Administrative Company
2012
Aug. 9
Universal Service Administrative Company, to Julie Veach, Chief,
Data Letter
Wireline Competition Bureau, Federal Communications Commission,
WC Docket No. 02-60 (filed Aug. 9, 2012) (USAC Aug. 9 Data
Letter).
98

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