Chartis Group: Rural hospital closures expected to pick up as relief dollars go away

As COVID-19 pandemic relief dollars erode, a new report is predicting a trend of rural hospital closures is expected to ramp up again in 2023. 

The nonprofit Chartis Group released a study Tuesday that found nearly 51% of rural hospitals have a negative operating margin, and the number of facilities eliminating services like obstetrics increased in 2022. Experts say a new rural hospital designation could offer a key lifeline to facilities, especially as pandemic relief dollars are tapped out.

“We are right back to where we were,” said Michael Topchik, national leader for the Chartis Center for Rural Health, in an interview with Fierce Healthcare. “All of those programs that infused new capital have worked through the system.”

The Provider Relief Fund as well as sequester relief and other programs have helped prop up hospitals hit hard financially by the pandemic. Only two hospitals closed their doors in 2021 and seven in 2022, a drastic change compared with the record-setting 19 in 2020. 

“Even though the number of 2022 closures were relatively small compared to some of the other yearly totals since 2010, it represents more than three times the closures in 2021,” according to the report.

Chartis has found that over the past 13 years, 143 facilities have closed and another 453 are vulnerable to shutting their doors.

The report also found that “care deserts” are continuing to increase across the country as vulnerable facilities stop offering key services. 

A prior Chartis report showed that in 2019, there were 198 facilities that stopped providing obstetrics services. The new report found that figure has increased by 9% to 217. 

More hospitals have also stopped offering chemotherapy services. From 2014 to 2019, 311 facilities stopped providing this service. The figure increased to 353 facilities in the latest report. 

Chartis has previously estimated there are 2,200 rural hospitals and 1,340 are designated as critical access hospitals, Topchik said. 

Designating rural hospitals 

One of the biggest lifelines available for rural hospitals this year will be to convert to a new rural emergency hospital. 

A rural emergency hospital would be able to avert closure but still retain some pivotal services like an emergency room and outpatient care. Hospitals that convert to a rural emergency hospital will get a 5% bump in outpatient care reimbursement for each service. 

Chartis’ analysis looked at approximately 1,600 rural hospitals that could convert to a rural emergency hospital. They found that there are nearly 400 facilities “most likely” to consider conversion, and, of that figure, 77 were ideal based on their performance profile such as the number of beds and revenue. 

It remains unclear how many facilities will fully convert as there are multiple factors to keep in mind such as ceasing inpatient services and giving up participation in the 340B program. Those factors will likely “result in a relatively small number of conversions that do not necessarily fit the mold,” the report said.