Skip to main content

CHQPR Offers Strategies To Keep Rural Hospitals Open

Analysis  |  By Amanda Schiavo  
   May 06, 2022

Some small rural hospitals are in danger of closing within the next two to three years.

Rural hospitals across the country are in danger of shutting down due to continuing financial losses on the delivery of services to patients and the end of the government-provided pandemic assistance, according to a new study from the Center for Healthcare Quality and Payment Reform (CHQPR).

Out of 600 rural hospitals, 200 are in danger of closing in the next two to three years, according to the CHQPR survey, while 30% of those 600 facilities are at risk of closing in the future. The increasing cost of delivering patient services rose due to the higher price of personal protective equipment and other expenses incurred due to COVID-19. At least one rural hospital in each state is at risk for "immediate closure," according to the CHQPR report, and in 16 states that figure jumps to five or more.

However, CHQPR says there are solutions to this problem, just not the ones that are most often put forward.

"Creating global hospital budgets, eliminating federal sequestration, eliminating inpatient services, and expanding Medicaid will not solve the serious problems facing rural hospitals," Harold Miller, president, and CEO of CHQPR said in the study. "The only way to ensure that residents of small rural communities have access to affordable high-quality healthcare is for their health insurance plans to pay adequately for the services delivered by their local hospitals. Rapid action is needed if we are going to prevent more hospital closures from occurring."

The CHQPR study suggests the best way to ensure rural communities can access affordable, high-quality healthcare is for health insurance plans to provide hospitals with standby capacity payments that will assist in maintaining the hospitals' ability to provide essential services. The CHQPR says payers will also need to adjust the way they pay small rural hospitals because most of the time they are underpaying these facilities. However, the biggest change is going to need to come from private health insurance companies. The low payments from private insurance plans and Medicare are the largest factor in small rural hospitals' negative margins.

"There are two different types of hospitals in America—large hospitals that make high profits on patients with private insurance, and small rural hospitals that lose money providing care to these patients," Miller said. "Private insurers are paying too much for services at many large hospitals but they are paying too little to sustain essential services in rural areas. Failure to address this will worsen healthcare disparities in the country."

Amanda Schiavo is the Finance Editor for HealthLeaders.

Tagged Under:

Get the latest on healthcare leadership in your inbox.