CHEYENNE WELLS
Tucked into the heart of Keefe Memorial Hospital, less than 18 miles from the Kansas border, a chapel sat silent on a recent afternoon, an enduring reminder of the institution’s faithful origin, while activity animated the health care space around it.
Opened in 1962 by the Sisters of St. Joseph of the Third Order of St. Francis, the hospital was gifted by the sisters to Cheyenne County in 1987, having been expanded and updated more than a decade earlier to include — significantly, as it turns out — a larger laboratory facility.
Now, as new construction once again expands the hospital’s lab services, Keefe Memorial is pursuing a creative strategy to reinforce the perpetually tenuous financial future of community health care, work that has often relied heavily on faith.
But now, the hospital has found that rather than investing trust in often fickle government and grant funding, it can lean into its lab capacity to change the game.
The facility’s equipment for medical testing already outstripped the 25-bed hospital’s everyday demand. So Keefe Memorial partnered with a company that helped it expand its geographical reach more than 100 miles and ramp up work in its underused laboratory. It offers quick-turnaround testing — from routine blood panels to dozens more, including some urinalysis — that has done much more than assist doctors and their patients.
The new revenue stream has provided a significant economic infusion and helped solve the daunting calculus of rural health care for a hospital that serves all of Cheyenne County and into western Kansas — a footprint roughly the size of Delaware.
As Keefe Memorial looked for inventive ways to add income, the search led to a profit-sharing arrangement with InReach Community Dx (diagnostics), says Claressa Millsap, the hospital’s chief executive officer.
The Pocatello, Idaho-based company helps community health centers and hospitals scale up laboratory operations and connect with clients — independent health care providers unaffiliated with major networks — who share a concern for the future of rural health care.
Millsap, who became CEO at Keefe Memorial in 2021, took about a year working with the company to determine that the partnership made sense. The hospital launched its first remote draw site in the fall of 2022.
“We were figuring out how we can do things maybe a little differently,” she says, “instead of trying to do the same thing over and over again and getting the same answer.”
It didn’t take long for the new lab business to have an impact on the bottom line.
“Almost immediately,” Millsap says.
Insurance payments started arriving within 30 days, and Keefe Memorial hit the break-even point for its new venture at the 90-day mark, according to Casey Halde, the hospital’s chief financial officer. Up-front costs were minimal: Additional blood-draw supplies plus “a little bit of an FTE increase” for the phlebotomists.
So far, the hospital has installed draw sites in independent medical offices in Colorado Springs, Castle Rock and Elizabeth.
A little-known solution
For all its promise, the lab services solution has largely flown under the radar among rural hospitals. Michelle Mills, CEO of the Colorado Rural Health Center, an independent nonprofit that offers services and resources to rural providers, allowed that she doesn’t know many of the specifics beyond the hospital’s use of an outside organization to facilitate lab testing.
But she says that sort of innovation can be crucial.
“It’s a scary time right now, because we’re facing some pretty big losses,” Mills says, noting the uncertainty around insurance subsidies and Medicaid cuts scheduled to begin in 2027. “We have 21 of our 43 rural hospitals right now operating in the red. We suspect that number is gonna go up.”
That said, Mills also points out that rural facilities continually try to be creative with fundraising and grants and anything else to cover their costs. The lab operation represents “the type of innovative thinking we have to be harnessing.”
How big of a difference-maker has the program been so far?
“Huge,” says Keefe Memorial’s Halde.
At one point in the second year of operation, she notes, the outreach lab accounted for 60% of the hospital’s annual gross revenue. That dropped to about 40% of revenue in 2024 and then 33% in 2025, with the lab’s outreach operations generating $5 million of the hospital’s $15 million total.
Already in 2026, Halde adds, she sees the numbers starting to trend back up, making her optimistic that this year the lab could hit 45% of revenue. It’s all especially significant in light of unfunded patient care.
I feel like we’re on the cutting edge of critical access hospitals moving forward.
— Casey Halde, Chief financial officer at Keefe Memorial Hospital
“We just don’t get paid for a lot of the stuff we do because the patient doesn’t have insurance, or the insurance companies restrict what they pay us based on denials and pre-authorizations and payer contracts and such,” she says. “So this closes that gap for sure.”
Perhaps even more important, it provides dependable income in a health care environment largely ruled by uncertainty. The hospital can’t control whether government funding will be renewed year to year. Or how insurance reimbursements might fluctuate. Or how payers might change rates or deny payments.
Or even how regulations and legislative restrictions might affect its operations.
“But this, I feel like we have control over,” Halde says. “It’s our own destiny. It makes it less volatile. I feel like rural hospitals are going to have to find a niche like this to keep their doors open, because the barriers that we face every day in health care are strangling rural hospitals.”
How it works
Once the hospital partnered with InReach, that company’s representatives sought out independent medical practices on the Front Range. Their sales pitch focuses on three factors: customer service, turnaround time and positive patient outcomes. But it also appeals to potential clients interested in channeling business to a designated critical access hospital — one that ensures health care access in underserved areas.
“We’re looking for a handful of like-minded providers and physicians that understand the mission that we’re undertaking, and they subscribe to that,” says Sean McShane, the InReach CEO. “So this goes far beyond lab work. There’s a number of laboratories that any provider or doctor can partner with, but we have a compelling story and our mission is to help support these rural hospitals.”
And so that Delaware-sized service area continues to expand as the hospital serves lab clients well beyond the Eastern Plains.
“It’s just really broadened our whole horizon, from a payer mix, and from a patient standpoint,” CFO Halde says. “I feel like we’re on the cutting edge of critical access hospitals moving forward, because we have to be so precise with everything in the lab that it just makes the quality that much better.”
She noted two things that interest client medical practices the most: testing turnaround times far faster than the three to five days it can take some national labs, plus having an on-site phlebotomist which eliminates the patient’s need to go to another location for a blood draw.
“There’s a little mini lab set up,” Halde explains, “and it’s our employee that is doing the draw and packaging it up and doing all of the appropriate paperwork and making sure that it gets ready for that courier to come later.”
Once the phlebotomists in client locations draw blood, the hospital then sends its Cheyenne Wells-based courier service to pick up and deliver the samples to the lab, where the evening shift runs the prescribed tests and shares the results through a computer portal.
The lab reports 94% of its tests are turned around in less than 24 hours.
In financial terms, the lab’s viability as a revenue source depends not so much on the number of sites or the number of patients, but the number of tests needed to support the on-site phlebotomist. That threshold is only five or six samples per day.
In addition to the increased revenue, the arrangement allows Keefe Memorial to expand the range of tests it can perform for local patients. The hospital can now perform more than 60 new tests.
“It’s unusual for a small hospital like this to have this much availability of testing in its area,” says Daniel Covington, the hospital’s head of laboratory services. “A larger hospital would probably have even more than what we are offering, but for this community and the size of this hospital, it’s very unusual to have that broad of a menu.”
That menu continues to expand — as does the hospital’s laboratory facility.
Betting on the future
The hospital’s current lab setup operates in cramped quarters where workers can process about 100 specimens each day — more than enough capacity for the roughly 20 samples that pass through daily. The majority of these are blood tests, though the lab can also do basic urinalysis.
But Keefe Memorial has nearly finished a $400,000 expansion that will add two more analyzers installed in refinished space in another wing of the building, Covington explains. The new equipment is expected to be up and running around mid-February, expanding capacity while also providing a backstop for the existing analyzers.
Down a hallway past the chapel, down some stairs, outside past the helipad and into a construction area, Covington leads the way into the newer space. It includes a reception area for patients visiting to have their blood drawn, the lab manager’s office and then the new laboratory, where workers are still setting up the equipment.
The ‘secret sauce’ is the demand within the facility itself that we keep quality high.
— Daniel Covington, Head of laboratory services Keefe Memorial Hospital
“Not only are we doubling our capacity and also giving ourselves redundancy, we’re also automating manual services that we do now,” Covington says. “We’re automating our blood bank, which gives us the flexibility in time and turnaround so a single tech can do twice the work that they used to be able to do.”
Eventually, he says, the lab will also handle microbiology services, such as growing bacteria from a urine sample to determine the nature of a kidney infection and what antibiotic to prescribe.
But for now, the focus is on getting the new equipment calibrated and running correctly, then performing comparisons between the new and existing analyzers to make sure they’re synchronized properly. Covington notes that there’s a lot of compliance hoops to jump through before everything is ready to start processing for clients.
“The ‘secret sauce’ is the demand within the facility itself that we keep quality high,” he says. “We have a quality requirement that goes beyond just the federal or state requirements.”
Origins of a business model
The concept that became InReach originated 11 years ago with some proverbial back-of-a-napkin calculations. First, critical access hospitals in rural America have limited revenue streams because, by definition, they have a very controlled population base.
“Many are just kind of waiting for the next trauma to happen on the highway or on the farm,” CEO McShane says. “And so what we tried to do was to find a business model that would not weigh them down, but that would in fact create new, sustainable and responsible and scalable revenues via their labs.”
What he and his partners learned quickly, he recalls, is that critical access hospitals necessarily have commercial grade laboratories, with a lot of excess capacity. They have the same med techs as bigger hospitals. They have the same machines that larger lab companies run.
And so they approached their first potential client, Lost Rivers Medical Center in Arco, Idaho, with a proposition. A model, really, in which they would enter a partnership. InReach would connect the hospital with doctors unattached to the bigger corporate systems who liked the idea of sending their lab business to help rural facilities.
Lost Rivers would control everything, from the testing and managing the results through the billing of clients. InReach’s role was to become an extension of the hospital in the broader regional community, finding ideological matches with providers who understood and supported the role of rural health care facilities struggling just to keep their doors open.
The company conducted an “opportunity assessment” to learn about the hospital’s capabilities and current lab usage. The parties agreed to a geographical region from which to seek clients. Finally, InReach made its pitch for a business arrangement that would bring enough samples to the hospital’s lab to create sustainable revenue.
Flat fees for his company’s services would be a deal-breaker, McShane figured. So his proposed model meant investing in the hospital’s process and working at the hospital’s pace — understanding that, in the uncertain health care billing world, any return on investment would likely be a year or more down the road.
The company wouldn’t take credit for a hospital’s existing lab business, but would split revenues and costs on business it generated as a profit-sharing partner.
With that agreement, InReach had its first client — the first of its four current hospitals spread across rural Idaho, Utah and Colorado, with a fifth scheduled to begin work in January. And so far, the partnership has had a positive effect on the facilities’ financial health.
“In each hospital, it definitely moves the needle — no pun intended,” McShane says. “We played the long game with this, and we’re proud of that now. That was costly at first, but we found that it was an attractive model that critical access hospitals could digest and wrap their arms around.”
“Bigger doesn’t always mean better”
When it comes to lab outreach as a growth sector, even McShane hesitates to guess how many similar ventures exist — and others echo that uncertainty over how widespread the model is now or how it could spread to struggling rural health care facilities across the country.
Brock Slabach, chief operating officer for the Kansas City-based National Rural Health Association, a national nonprofit advocacy group, says only that “honestly, this has not been something that’s running rampant.” He knows of four or five facilities across the country that have adopted lab outreach programs, and “they all seem to be doing well with it.”
“I would venture to say that this is a service that is not a very common practice at this point,” Slabach adds.
McShane figures there are some companies that would consider themselves doing comparable work to his, but “I just don’t come across them in the highways that we travel.” But with the company’s success so far, he has found himself considering how to expand. Whereas 11 years ago he dreamed of an IBM-like dominance in this industry niche, experience has reminded him that “bigger doesn’t always mean better.”
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In turn, that has led InReach to think seriously over the last year or so about not only how to add scale to its business, but more basically: What is our appetite for growth? It’s a question he shares on a regular basis with his partner hospitals, which have their own appetites and capacities to consider.
“That means a lot of looking in the mirror for us as a company,” McShane says. “People remind me, we’ve got an obligation and a duty to share this, because there’s a lot of hospitals and communities, hundreds and hundreds, that would benefit from what we do.”
Still, he notes that “it’s not a quantity game,” and he doesn’t want to pit rural hospitals against each other. While sensitive to the competitive geography of the state, McShane says InReach anticipates adding another Colorado hospital — he declined to disclose the candidates yet — thanks to existing resources that wouldn’t require much added expense.
“We’ve got built-in costs right now which I’d like to utilize to create new revenue streams,” he says. “We’re confident that 2026 will not only see the growth at Keefe Memorial, but will probably end up adding another hospital. That’s certainly in our forecast for the year ahead.”
When Keefe Memorial CEO Millsap considers the improved financial future for her hospital, she likes to look to the past as well as the future. Specifically, she points to the 1946 federal legislation that created critical access hospitals across the country amid a post-war health care crisis.
“They strategically placed all of these hospitals throughout the United States, and we’re still in that space,” she says. “We’re needed. This (partnership) allows our hospital to continue providing services and be forward-moving and growing, instead of becoming stagnant.”