Rural hospitals face biggest fiscal crisis since 1980s

Stop sign with field in background

Rural hospitals faced some serious fiscal issues in the 1980s but nothing like the crisis today. And many may not survive it, Governing magazine recently reported.

The Affordable Care Act helped to precipitate the current crisis by moving payments away from a fee-for-service basis. But hospitals also face penalties for failure to meet certain quality measures or adopt electronic medical records, according to the article. 

But the 2012 U.S. Supreme Court decision that allowed states to opt out of Medicaid expansion may have been the most significant ACA-related impact of them all. With 18 states--many of them with significant rural areas--declining to expand Medicaid, many smaller isolated facilities were put on the brink of dissolution. According to a survey conducted earlier this year, some 673 rural hospitals are considered financially vulnerable, with more than 200 in danger of closing within a short time period.

That has forced some states to become creative about alternative funding methods. In Georgia, one of the states that has not expanded Medicaid, lawmakers have offered tax incentives to residents to make donations to rural health facilities. Individuals who contribute can apply for a tax credit equal to 70 percent of the amount of the contribution, up to $2,500, Governing reported. Georgia has also created a hub-and-spoke system of centralizing rural healthcare delivery.

Rural facilities in other states that have expanded Medicaid also take protective measures.

In New Mexico, one of the most rural--and poorest--states in the nation, Guadalupe County Hospital in Santa Rosa joined forces with five other facilities in 2014 to create a network of rural providers to share information, hire consultants and find other ways to navigate an increasingly tenuous operating environment. The New Mexico Rural Hospital Network now has 10 members throughout the state, High Country News reported. It receives some funding from the U.S. Department of Health and Human Services, which is trying to encourage more efficiency among rural facilities. It may be there only chance for survival.

“If this hospital closes, my kids have nowhere to go. My neighbors have nowhere to go. My employees have nowhere to go,” Guadalupe County Hospital CEO Christina Campos told High Country News.

- read the Governing article
- check out the High Country News article