Hundreds of rural facilities across the country are facing serious financial problems, a new report reveals.
A growing number of rural hospitals in the U.S. are hitting a breaking point.
Due to severe financial challenges, more than 700 facilities—over 30% of rural hospitals in the country—are facing closure, including 360 being at immediate risk, according to analysis by the Center for Healthcare Quality and Payment Reform.
More than 100 rural hospitals have already closed in the past decade, while over two dozen facilities have eliminated inpatient services in 2023 and 2024 to qualify for federal grants that are only available for rural emergency hospitals, the report stated.
The authors posited that the primary factor putting so many rural hospitals at risk of closure is low reimbursement from payers. While these hospitals are also losing money on uninsured and Medicaid patients, the biggest losses come from patients with private insurance. With about half of the services at the average rural hospital delivered to patients with private insurance, lack of adequate reimbursement from private payers is putting facilities in an unsustainable position.
Rural hospitals also serve a smaller number of patients as compared to large hospitals, which results in less revenue for rural facilities. To combat this problem, the report argued that both private and public payers should be required to increase payments to prevent closures, which the authors said would cost $5 billion per year, or an increase of 1% in total national healthcare spending.
Another way to support rural hospitals is to create standby capacity payments from private and public payers to support the fixed costs of essential services, according to the report.
Even making telehealth flexibilities permanent instead of allowing them to expire on December 31 would go a long way to supporting rural health, Grande Ronde Hospital CEO and HealthLeaders Exchange member Jeremy Davis recently told HealthLeaders.
Davis testified in front of the Senate Finance Committee on rural healthcare in May and advocated for Congress to take action to keep hospitals from closing their doors.
“One of the things that I said in my testimony is, as a rural hospital administrator, we're looking for a help up, we’re not looking for a handout,” he said. “We want to be good stewards of the resources. We recognize funding is complex but trust us, enable us. There's a lot of really good people that are working in rural that are used to doing some great things with limited resources.”
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Jay Asser is the CEO editor for HealthLeaders.
KEY TAKEAWAYS
Research by the Center for Healthcare Quality and Payment Reform cautioned that more than 700 rural hospitals are at risk of closure, with 360 of those in immediate danger.
The number one reason for the precarious position rural hospitals are in is lack of reimbursement from public and private payers, with the latter especially harmful due to nearly half of the services at the average rural hospital delivered to patients with private health plans.
Requiring payers to increase payments to rural hospitals, creating standby capacity payments from insurers, and not allowing telehealth flexibilities to expire are potentially some of the solutions to supporting rural hospitals.