Rural hospitals in trouble if Congress doesn't renew funding programs, AHA says

Photo: Knaupe/Getty Images

Between 2010 and 2021, 136 rural hospitals closed, according to the UNC Cecil G. Sheps Center. Nineteen of these closures occurred in 2020, the most of any year in the past decade.

That finding, one of several in a new report from the American Hospital Association, highlights the hardships under which rural hospitals have been operating, and represents a bid by the AHA to pressure Congress into renewing key funding programs that expire at the end of the month. Without those programs, the group said, a new wave of closures is likely.

The majority of rural closures, 74%, happened in states where Medicaid expansion was not in place or had been in place for less than a year, the findings showed. And rural  hospitals face significant staffing shortages. Only 10% of physicians in the U.S. practice in rural areas despite rural populations accounting for 14% of the population. Nearly 70% of the primary care Health Professional Shortage Areas (HPSAs) are located in rural or partially rural areas.

An AHA analysis of the UNC Sheps Center rural hospital closure data between 2010 and 2020 shows that slightly more than half of the hospitals that have been closed were independent.

WHAT'S THE IMPACT

In 2020, rural hospitals supported one in every 12 rural jobs in the U.S. as well as $220 billion in economic activity in rural communities, data showed. 

But these facilities have been hit especially hard by the COVID-19 pandemic. While rural hospitals were partially buoyed by the Provider Relief Fund and other sources of COVID-19 assistance that limited closures in 2021, the financial outlook for many rural hospitals moving forward is precarious.

These closures – whether due to declining financial performance, geographic isolation or low patient volume – have an outsized impact on the health and economic wellbeing of rural communities, the AHA said. Additionally, rural hospitals are disproportionately impacted by issues such as coverage trends, workforce and regulatory barriers.

Part of what makes a federal extension of funding programs so pressing, in the AHA's view, is that rural hospitals rely more heavily on government program reimbursement. Many don't have the power to negotiate higher rates with commercial payers, and their populations often are Medicare or Medicaid beneficiaries, which means hospitals are often reimbursed for less than their total cost of care.

The Medicare-Dependent Hospital program and Low-Volume Hospital program have provided financial support to rural hospitals but are both set to expire at the end of the month. The AHA called the programs a "much-needed" lifeline that should be extended to prevent more closures.

"Although rural hospitals have long faced circumstances that have challenged their survival, we will most likely see more rural hospital closures as they attempt to adapt to the unprecedented challenges brought on by the COVID-19 pandemic," the AHA wrote. "Rural hospitals also require increased attention from state and federal government to address barriers and invest in new resources in rural communities."

THE LARGER TREND

Earlier this summer, the Centers for Medicare and Medicaid Services proposed a new rule that creates a pathway for rural hospitals and critical access hospitals to increase access to emergency and outpatient care. It's the first step in the implementation of a new provider type: Rural Emergency Hospitals (REHs).

Small rural hospitals can seek this provider designation through a Conditions of Participation for REHs. This will allow them to provide continued access to emergency services, observation care, and additional medical and outpatient services, and to provide maternal health, behavioral health and substance use disorder services. Hospitals under the designation will be eligible to receive payment for services provided on or after January 1, 2023.

The new Medicare provider designation will allow rural hospitals to right-size their service footprint and avoid potential closure, CMS said.

Rural hospital closures occur disproportionately within communities with a higher proportion of people of color and communities with higher poverty rates, according to the Department of Health and Human Services.

Rural communities represent a fifth of the U.S. population. Rural populations experience shorter life expectancy and higher mortality, and have fewer local healthcare providers, leading to worse health outcomes than in other communities, HHS said.
 

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com