The number of rural hospitals that shut their doors reached a record-setting 19 last year, according to a new report that aims to pinpoint why hospitals are closing.
The Chartis Center for Rural Health and iVantage Health Analytics released a report (PDF) Friday that found 120 rural facilities have shut their doors since 2010. The study also explored indicators that can lead to a rural hospital’s demise.
“The accelerated rate at which rural hospitals are closing continues to unsettle the rural healthcare community and demands a more nuanced investigation into rural hospital performance,” the study said.
The number of rural hospital closures lessened somewhat in 2016, going from 17 in 2015 to 12. That decline though was short-lived, as “there have been 34 closures in the last 24 months,” the report said.
A slew of factors has exacerbated the closure of rural hospitals in recent years. A 2019 report from the American Hospital Association found that hospitals—which are traditionally cash-strapped—are facing workforce shortages, high drug prices and inadequate payment from government programs.
The Chartis report laid out warning signs that a rural hospital was on course for closure. The report looked at three years of financial and operational data for rural hospitals before they closed.
The report identified nine indicators to measure whether a hospital is ripe for closure. Some of the indicators include occupancy rates, age of the facility, system affiliation, total revenue and case mix index, which is the ability to handle a broad mix of services.
“According to this model, for example, a one percent increase in the percent change in total revenue can decrease the likelihood of closure by three percent on average,” the study said. “Similarly, a one percentage increase in the proportion of outpatient revenue decreases the likelihood of closure by five percent on average.”
Another key indicator is whether the state expanded Medicaid under the Affordable Care Act.
“Rural populations are shown to be older, less healthy and less affluent than urban counterparts,” the report said. “Medicaid expansion creates opportunities for individuals in rural communities to move from the ranks of the medically uninsured.”
The model found that being in a state that expanded Medicaid decreases the likelihood of closure by 70% on average. So far, there have been 14 states that did not expand Medicaid.