Hospitals Vanishing from Rural America

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Since January 1st, 2010, 120 hospital facilities have closed their doors in rural areas across the United States. These rural hospitals are no longer providing acute, in-patient care. The number of closures has increased at a rate that more hospitals have closed in America than opened since 2011. According to an estimate from iVantage Health Analytics, in the coming years, upwards of 600 more rural hospitals within the United States are also expected to cease their operations. These health facilities play a substantial role in the health outcomes for rural Americans. From these small communities, the next hospital that serves critical-care patients could be more than 20 miles away. So what has provoked these rural community hospitals to close? How are these closures impacting the social determinants of health for rural communities and their residents? Are there any groups or legislative bills that are attempting to address the issue?

Reasons for Closing

One major player in these closures is the patient’s insurance plan. This reason can be further divided into two categories: public insurance and private insurance.

Patients that have public health insurance use Medicare, a federal health insurance program for individuals who are over the age of 65 or specific young individuals with disabilities. Some patients may also use Medicaid - a federal and state program that helps cover medical costs for low-income individuals - in conjunction with Medicare. Recent studies have found a correlation between Medicare/Medicaid and rural hospital closings. An issue brief in The Commonwealth Fund said that hospitals in states that have expanded Medicare/Medicaid options were reimbursed a combined $6.2 billion in uncompensated medical bills. Rural hospitals in states that have low-income or uninsured patients and did not expand federal healthcare benefits were more vulnerable to closing. However, this correlation is still being heavily debated. Medicare/Medicaid pays just enough to pay the bills, which leaves no room for hospitals to use surplus funds to reinvest in their facilities. On the other hand, rural hospitals in mostly low-income communities could stay afloat with the funds from Medicare/Medicaid patients.

Patients with private insurance create a different issue for rural hospitals. In rural areas, more and more people are getting health insurance with high deductibles. One problem is that these rural patients have lower incomes than urban patients, which means they struggle more with paying their deductibles. Another issue is that the rural hospital’s claims from a patient’s medical bills are applied to the patient’s deductibles. Let’s take a case where a critical-care patient is stabilized at a rural hospital before being transferred to a better-prepared urban hospital. Frequently, insurance companies pay for the medical bills at the urban hospital, and the patient is left responsible for paying the rural hospital bills. When patients cannot pay, the rural hospital gets struck with a financial burden that could lead them to shut down operations.

Another player in these closures is the difficulty in recruiting full-time physicians. Urban areas have more flexible job opportunities for physicians than in rural areas, causing potential providers to be discouraged from working in rural hospitals. Also, because rural areas have a small population, there is a reduced demand for hospital services. As a result, rural hospitals can only offer specialty physicians to work once a week or once a month. This unconventional use of the expensive hospital facility becomes unsustainable and leads to the hospital shutting its doors.

Access to Healthcare and Community Life

The closing of a rural hospital significantly impacts the social determinants of health in a rural community. Immediately after the closure, access to maternity care, emergency care, and primary care become a major obstacle for rural residents. Specialists on mental health and substance use also leave the hospital. As a result, rural residents must travel far distances to seek necessary health care. In an article in the National Institutes of Health, researchers found that the closure of trauma centers causes increased travel time for trauma cases, leading to a higher risk of death. Also, what is often not considered is that some people may not actively seek care for their health due to the hospital closure. Not going to regular check-ups with a doctor may create more negative implications to their health down the road.

Moreover, the hospital closure impacts the rural community’s economy. Often, the hospital is the biggest employer in the town. Its closure means many pharmacists, nurses, doctors, etc. become unemployed, increasing the community’s unemployment rate and decreasing average income. The shutdown also creates a loss of sales tax revenue, meaning there are fewer public funds to be used in improving the community’s infrastructures. Local businesses, such as clinics and pharmacies, are also struck because of the low demand for check-ups and prescriptions. Overall, a hospital can be the economic lifeline for a rural community. Decreased economic activity may deter possible employers away from the community, further putting the community into a financial hole.

Can These Hospitals Be Saved?

Currently, three major proposals are attempting to save rural hospitals and the communities they serve.

In an article on Kaiser Health News, Kevin Stansbury, CEO of Lincoln Community Hospital in Hugo, Colorado, proposes that primary care services should be exempt from the health insurance deductible. By doing this, Stansbury hopes that this way, people will regularly check up on their health, and rural hospitals will bring in revenue. The proposal would also protect hospitals against accruing debt from unpaid bills because the responsibility of the rural hospital’s claims is shifted to the insurance companies.

Furthermore, the Colorado Hospital Association has a proposal to give at the 2020 legislative session. They propose that insurance companies should make the bills from various hospitals, doctors, and healthcare providers be consolidated into one bill. This method would make it easier for a person to see what they owe after one episode of care, and after the insurance company pays the hospital and doctors directly.

Lastly, the National Rural Health Association is pushing Congress to enact H.R. 3225, the “Save Rural Hospitals Act.” The bill has a twofold purpose. One, the bill would “eliminate numerous cuts in Medicare to rural hospitals.” Second, the bill will establish a program for rural hospitals to receive “enhanced payment” for meeting certain standards of operation.

More posts by James Bradley Parente.
Hospitals Vanishing from Rural America
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