A Discussion Around Why Rural Hospitals In America Are Closing at a Faster Pace Than Ever Before?

Rural hospitals have been in a slow decline for decades. Over 135 facilities have closed in the recent past. There are 2,245 remaining rural hospitals out of what was about 5,000 facilities nationwide a just over decade ago. Unfortunately, rural hospitals have begun closing at an even faster rate in recent years. And when a closure occurs, it typically causes other local providers to shut down like those in primary or specialty care. Additionally, the closure of rural healthcare facilities negatively impacts the local community’s economy as well as resulting in a significant access gap to quality, affordable care. These gaps might be partially filled by federally qualified health centers in some cases, but significant gaps in primary care remain after the closures occur. Paula Chatterjee MD, and Assistant Professor of General Internal Medicine at Penn’s Perelman School of Medicine, recently wrote about the Causes and Consequences of Rural Hospital Closures, for the Journal of Hospital Medicine. She discussed the plight of rural hospitals in more detail as outlined in the interview questions below.

Interview Source: November 8, 2023 update “Our Work in Health Care Access & Coverage” | Blog Post The Plight of Rural Hospitals: “They’ve Been Closing at a Faster Rate Than Urban Facilities for Years”. And “Wider Economic Development Is Needed So They Can Thrive in the Post COVID Era By: / Research Updates Karl Stark and Paula Chatterjee, MD. Interviews.

1.?????? Rural Hospitals are smaller and generate less revenue – What do we know about why rural hospitals are closing?

It’s hard to know the exact causes, because so much is changing in rural communities at the same time. Teasing apart which factors are causal and which are just along for the ride is a tough task. We know that rural hospitals in states that did not expand Medicaid under the Affordable Care Act (ACA) were more likely to close in the post-ACA era. Other things that might be linked to a higher likelihood of closure include the facilities’ precarious finances as well as declining economic conditions in broader rural communities. Among the rural hospitals that have closed in recent years, a larger share of them were for-profit. Another factor is that rural patients are increasingly bypassing their local hospital to seek care at newer more modern facilities often only located farther away in major urban areas. These bypass patterns may be driving lower occupancy rates for rural hospitals. The reasons for this behavior are unclear but may be related to better access to specialty care and an overall perception of better if they travel to a major medical center or simply due to the realities that local hospitals might not have the staff and thus offer the care they need.

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2.?????? How do the finances of rural hospitals compare to their urban and suburban counterparts?

Rural hospitals are typically much smaller. They have lower occupancy rates and are more susceptible to financial volatility and a lack of financial resources to maintain let alone update or expand their facilities infrastructure. Rural hospitals typically also have less than half the median profit margins of urban hospitals resulting in less reserves to provide for emergency capital let alone invest in the future which makes it tuff to attract talented young doctors and nurses to their facilities.

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3.?????? How did the COVID-19 pandemic affect rural hospitals?

We are not completely sure yet but to date we show counts, of as many as 26 rural hospitals having closed since the beginning of COVID-19 which doesn’t appear to be a big departure from pre-pandemic trends. Nevertheless, the trend even before Covid has been that rural hospitals continue to close at faster rates than a decade ago. On the other hand, others have made the case that rural hospitals may have been uniquely able to withstand some of the pandemic-related financial pressures over the long term better than the larger medical centers found in larger cities due to their lower overhead and their tendency for operating multidimensional roles already played by staff members along with strong community-hospital relationships that were built before the pandemic set in. And since rural hospitals are smaller, they do generate less revenue – they make less money than urban facilities but during Covid they received significant federal subsidies that in many cases may have improved their bottom line. But COVID is now over and so is the special reimbursement. Rural communities across America now ?fear that many of their rural hospitals will close due to worsening ?financial conditions post- COVID. ?And the growing gap ?in ?resources and reimbursements ?for care in poorer, underserved rural communities.

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4.?????? Can you explain why the gap is bigger in these poorer communities? ???

There’s some evidence to suggest that rural hospital closures were more likely to occur in counties with larger shares of poverty most often found in non-white rural communities. This is in the context of rapidly changing demographic and migration patterns in rural America, which is becoming increasingly represented by racial and ethnic minority population shifts in rural areas. There’s also prior work showing that rural counties with higher proportions of Hispanic Black populations were more likely to lose access to obstetric care. But this same outcome is believed to be true for several other specialties as well. Taken together, these trends raise concerns that the poorer rural populations being left behind are overrepresented by communities of color.

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5.?????? What kinds of support do rural hospitals already get from the state and federal governments?

There are over 20 different programs run by the Department of Health and Human Services designed to financially bolster rural hospitals. Those facilities also get support in the form of local or state government subsidies and can benefit from different types of provider taxes. Despite the proliferation of these supports, these hospitals have continued to struggle financially.

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6.?????? What recommendations do you have for policymakers? ????????????????????

?If we want to bolster rural health care, we have to bolster rural communities more broadly. Decades of reforms focused on health care payment and its associated infrastructure have not eased the fundamental challenges that rural communities face related to declining economic opportunity and growing socioeconomic disadvantage. The goal of health care is to improve health. Designing policies that focus on the upstream drivers, like improving economic outcomes like improving employment conditions in part by leveraging the Demand from these rural healthcare abilities to help spur revitalization and new economic development , may prove to be more fruitful since they have far more to do with driving social health outcomes as well as health care itself. Bolstering rural health care delivery should remain a priority while we also focus more on the upstream factors that can be ignited through public private investments in health and wellness Infrastructure. In that vein, I think novel policies like investing in developing new Rural Emergency Hospital facilities ?models that are smaller but more efficient and can l play a critical role in the overall wellbeing of rural America will be critical to the survival of our rural healthcare network. ?For Example, The Pennsylvania Rural Health Model is rethinking how rural health care can be delivered to meet the challenges of their communities. The Rural Emergency Hospital Program allows rural hospitals to convert to emergency departments without providing any inpatient care. The goal is to preserve access to emergency care without exposing rural hospitals to the potentially unnecessary fixed costs of running an inpatient unit that is rarely occupied. The Pennsylvania Rural Health Model began in 2019 and is designed to fundamentally change the way rural health care is funded. By giving hospitals a “global budget,” the program seeks to provide financial predictability and stability for these hospitals so they’re able to transform the way they are built and designed to deliver patient care to meet patients’ needs. In reality, this has come in the shape of scaling up telemedicine capabilities or developing community health wellness programs. What’s great about these approaches is that they’re trying to meet rural communities where they are. They offer financial support but permit enough flexibility in how they are implemented to meet the needs of different communities. It will be exciting and important to see how these programs evolve in the coming years.

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The Economic Impact of Rural Hospital Closures:

Much of the nation is in the grips of a rural hospital closure crisis. There are many reasons a hospital may close ranging from declining reimbursement levels, and lack of financing to maintain aging facilities to shrinking population, and swelling uncompensated care, along with increasing operating cost. Yet, our rural communities deserve to have good health care and hospital access. It is a crisis that needs to be fully addressed by state Legislatures across the US. and the Congress of the United States. As of November 2023, its estimated that there are another 180 rural hospitals at risk of closure with 76 of those hospitals at immediate risk of closing in Texas alone during the 2024 FY. That represents an estimated 8100 high paying jobs lost and hundreds of millions of revenue dollars lost resulting in a negative economic impact to rural communities across America. When a rural hospital closes, it can disrupt both the health and economic wellbeing of a community. The health care sector supplies an average of 10% of high paying jobs in rural areas across the US. Studies clearly show the links between rural hospital closures, lower overall employment, and the negative social and economic impacts that result from hospital closures per capita at the county level.?It’s also important to note that collectively, these studies indicate that upstream economic factors such as unemployment in sectors other than health care and the general loss of local investment which contributes to population migration also directly results in lower hospital occupancies and ultimately poor finances which often result into hospital closure. Researcher Paula Chatterjee, MD. and colleagues stress that despite their extensive analysis, current available data is still only at the county level. Understanding the local influences and impacts of a hospital closing in rural areas by town or community will require further studies and more ?granular data. Nonetheless, Chatterjee and researchers suggest that based on their initial study results, programs and policies that focus solely on stopping rural hospital closures may be ineffective alone. Success at reducing closures will require a broader focus on engaging the community with their hospital’s local community development and revitalization efforts, for example, engaging in innovative, new public-private partnerships that state or federal tax policies encourage in rural markets (e.g. Empowerment ?and Enterprise Zones). This type of support helps boost rural communities in general and positively impacts maintaining hospital-based rural health care and the important role it has on the local economy.

ABOUT THE HEALTHCARE INFRASTRUCTURE RESEARCH INSTITUTE: (HIR) The Healthcare Infrastructure Research Institute: Is a collaborative research program helping bring community leaders together with leading healthcare and life sciences professionals to address industry challenges at a national level. HIR's mission is to present the latest thinking from nationally recognized experts, providing an arena that facilitates interaction and collaboration among healthcare leaders, with public- private interests - focused on creating actionable programs that help improve the delivery of cost effective, safe, and operationally efficient healthcare facilities in underserved communities across the US. HIR also offers early planning, and development support including facilitating initial capital finance and Public-Private Development feasibility consulting service's to rural health systems across the US. at no cost. You can contact Chris Kay @ [email protected] for questions and or assistance if planning for a rural replacement hospital or community clinic in your community.