1 in 5 rural hospitals at risk of closing, Navigant says
- Without some type of financial relief, as many as one in five rural hospitals in the U.S. could be forced to shut their doors, a new Navigant analysis finds.
- Of those, 64% are "highly essential" to the heath and economic well-being of their communities. In 31 states, at least half of at-risk rural hospitals are deemed essential.
- Hardest hit are southern and midwestern states, including Alabama, Mississippi, Georgia, Arkansas, Kansas and Minnesota. In Alabama, half of rural hospitals are at a high-risk of closing.
Consulting firm Navigant is not the first to sound the alarm on rural hospitals. Since 2010, 97 hospitals have closed due to financial distress and a changing healthcare environment, according to the North Carolina Rural Health Research Program. A Government Accountability Office report found that 64 hospitals closed between 2013 and 2017, more than double the number in the prior five years.
Earlier this month, the American Hospital Association released a roadmap aimed at easing pressures on rural hospitals and expanding access to high-quality, affordable care in the communities they serve.
Navigant researchers looked at more than 2,000 rural hospitals nationwide to gauge their financial viability and how essential they are to their communities. Based on total operating margin, days cash on hand and debt-to-capitalization ratio, 21% are at high risk of closing — or a total of 430 hospitals in 43 states. Together, they employ 150,000 clinical and nonclinical workers, making them vital to local economies as well.
"Our analysis shines a new light on a rural hospital crisis that must be addressed and could significantly worsen with any downturn in the economy," co-author and Navigant Managing Director David Mosley said in a statement. "Local, state, and federal politicians, as well as health system administrators, need to act."
Factors impacting the rural hospital crisis include low population growth, payer mix degradation, excess beds due to the shift toward outpatient care and inability to leverage technology due to capital constraints.
For example, rural residents are more likely to be uninsured or on Medicaid or Medicare, forcing hospitals to absorb more uncompensated or under-compensated care, the report notes. With Medicare averaging 46% of gross patient revenue at rural hospitals, further reimbursement cuts can take a huge toll.
Helping rural hospitals survive will require a combination of legislative relief and strategic partnerships to leverage technology and economies of scale, according to the report.
Potential solutions include increasing telehealth reimbursement and measures such as the bipartisan Rural Emergency Acute Care Hospital (REACH) Act, which would create a new Medicare classification allowing certain rural hospitals to provide emergency and outpatient services only.
Partnerships with regional tertiary and academic health systems could also spell relief for struggling rural hospitals by helping to leverage telehealth, EHRs and other back office functionalities, the Navigant analysts say.
Some hospitals are already doing this. In a 2017 interview with Healthcare Dive, Leslie March, CEO of Lexington Regional Medical Center in south central Nebraska, described partnerships her organization has forged to bring surgeons to the critical access hospital to perform operations and share a data analyst — both of which would be financially prohibitive to do alone.