Rural hospitals face long odds

Changing demographics, lack of Medicaid expansion threaten rural hospitals

Rural hospitals are under siege, battling demographic changes, eroding federal support and state-level decisions. And they’re losing.

Since 2010, 80 rural hospitals have closed, and 673 are at risk of closure, according to iVantage Health Analytics, with 210 at “extreme risk.” Mounting losses, particularly in the South, are leaving counties without stable economic bases and residents without adequate health care and forcing counties to start helping private hospitals stay in business.

Meanwhile, developing legislation to roll back the Affordable Care Act includes cuts to Medicaid that would, in the words of rural hospital consultant Jimmy Lewis “wipe out rural health care.”

The 20 percent of the U.S. population in rural areas tends to be poorer, older and sicker and more expensive to care for. Two-thirds of the patient costs at rural hospitals are paid for by Medicare and Medicaid.

“The Affordable Care Act has served as a mitigating force for these rural hospitals,” said Michael Topchik, national leader of the Chartis Center for Rural Health. “In states that have expanded Medicaid, you see a higher median rural operating margin and fewer closures.”

But the Kaiser Family Health Foundation says that Medicaid expansion alone isn’t enough to save these hospitals.

“A hospital’s success is foremost a function of its demographics,” said Lewis, CEO of HomeTown Health, LLC. “It takes about 40,000 people in a community to support a rural hospital without subsidies.”

Those subsidies may come from counties, and residents in four Georgia counties have voted strongly in nonbinding referenda in support of raising taxes to support independent hospitals.

Quitman County, Miss. is one of those places not favored by demographics. It lost its hospital in September 2016.  County Administrator Velma Wilson said the Board of Supervisors found out about the hospital’s impending closure two weeks ahead of time.

As in many rural counties, the hospital was the largest employer, in this case supporting 93 full- and part-time workers. For an 8,000-person county, it was significant.

“Even the people who came from other counties to work there, they were spending money here,” Wilson said. “It’s hard to attract businesses if there’s no hospital in town.”

The hospital’s two doctors were working past their planned retirement ages and several attempts to sell Quitman hospital fell apart. Emergency room costs sealed the demise. Now, the closest medical center is a 30-minute drive away in Coahoma County. 

Wilson said the county does not want to get into the hospital business and administer one itself, but supervisors are looking to a different health care delivery model using the existing building.

“If we could reopen as an urgent care facility, maybe an emergency room, that would at least keep people alive until they can get somewhere else,” she said.

Lewis said urgent care facilities, while limited, are viable options, but the prospects for stand-alone emergency departments are not good.

Where Lewis does see promise is in the application of telemedicine, serving as triage before transporting patients to appropriate care centers.

“You do that in schools, churches or EMS units,” he said. “You can turn ambulances into rolling hospitals. Short of surgery, you can do everything to stabilize someone to get them somewhere else.”

Telemedicine’s application is limited by internet access and regions without broadband are at a disadvantage, though Lewis said 4G internet hotspots have worked in some cases.

That might be the best option for many counties that can’t support a hospital, with the realization that things won’t be the way they once were serving as a mental hurdle.

 “I think there’s a growing sense among rural policy makers that we need to stop the bleeding, but we also probably have to create an alternative path forward that preserves vital, critical services but also recognizes that we can’t have a ‘hospital’ in every community,” Topchik said.

 

Success Stories

The National Rural Health Association’s Top 20 Rural Community Hospitals highlight what can help rural hospitals thrive.

Campbell County, Wyo. is home to the Campbell County Memorial Hospital, in which the county has no managing interest, but property taxes help subsidize the hospital. It was one of the National Rural Health Association’s 20 featured hospitals, and Commissioner Matt Avery points to the county’s strong energy market when explaining why the hospital has been successful.

“When out daughter was born 40 years ago, we had to drive 90 miles to Sheridan County because we didn’t have a pediatrician in Campbell County,” he said. “That mineral wealth has made all the difference. We wouldn’t be able to afford this hospital without it.”

David Jahn, CEO of War Memorial Hospital in Chippewa County on Michigan’s Upper Peninsula, said his hospital has benefitted from limited competition in neighboring areas, but nothing beats the combination of focusing on safe, quality patient care and customer service.

Things are still tough for Jahn’s hospital, which, like many others, relies on government-provided health coverage for most patients.

“It would be great to be in an affluent community with commercial insurance where people pay 50 percent of what you charge,” he said. “We’re fortunate to get 30 percent of that.”

Like Lewis, Jahn sees telemedicine as the key to expanding healthcare.

“That has to expand exponentially in rural areas in the future,” he said. “If we don’t get on that, it’s going to make a lot of the things we try to do obsolete.”

Even for a successful rural hospital, War Memorial struggles with recruitment, seeing prospective doctors spurn opportunities there for jobs in cities.

The Policy Picture

Though federal legislation has been written to address rural health care, nothing significant will be done before the future of the American Health Care Act (AHCA) is resolved, said Topchik, from the Chartis Center for Rural Health.

As it stands, the AHCA would cut Medicaid spending by over $800 billion over 10 years, further reducing funding that supports rural hospitals.

“We are likely to see the total size of the pie shrink,” he said. “We will see a smaller total amount of reimbursement available for underemployed populations, indigent populations, which will disproportionately affect rural populations.”

Lewis laments the weak position rural communities have in the grand scheme of health care overhaul negotiations.

“We’re 20 percent of the population — we couldn’t sway politics if we wanted to, so where we find ourselves is at the mercy of whoever we can speak the loudest to,” he said.

But Topchik sees the rural support for the Republican Party lining up with both Republican and bipartisan legislation written to help rural hospitals.

The Rural Emergency Acute Care Act (REACH), sponsored by Sens. Charles Grassley (R-Iowa) and Cory Gardner (R-Colo.) would create a new Medicare payment designation for rural emergency care. The Save Rural Hospitals Act, introduced by Reps. Sam Graves (R- Mo.) and David Loebsack (D-Iowa) would reverse sequester cuts and preserve or increase federal payments for low-volume and Medicare-dependent hospitals, and delaying some penalties for rural hospitals.

“The political alignment makes something like the Save Rural Hospitals Act look viable,” Topchik said.