The hospital industry is highlighting rural facilities' financial struggles and impending shutdowns in their continued bid for Congress to renew key funding programs expiring at the end of the month.
In a report (PDF) released Thursday, the American Hospital Association (AHA) cited University of North Carolina at Chapel Hill research data indicating 136 rural hospital closures between 2010 and 2021. Roughly three-quarters of these closures were in states where Medicaid was not expanded or was in place for less than a year.
The closures reached a peak of 19 with the pandemic’s onset in 2020 before plummeting to just two in 2021, which the industry group attributed to payments from the Provider Relief Fund and other COVID-19 assistance.
The de facto end of those relief funds, lingering pandemic impacts and rural hospitals’ long-standing financial challenges threaten to trigger a new wave of closures, AHA wrote, threatening the health of those for whom the facilities are the only nearby source of care.
"While many hospitals and health systems are facing unprecedented challenges, those faced in rural America are unique,” AHA President and CEO Rick Pollack said in a statement accompanying the report. “We must ensure that hospitals have the support and flexibility they need to continue to be providers of critical services and access points for patients and communities."
The AHA’s report noted that rural hospitals comprise roughly 35% of the country’s total and provide care to almost 46 million people who are more often uninsured and, when sick, require more extensive care. These hospitals are often smaller, with nearly half having 25 or fewer beds, according to the report.
Rural hospitals are weathering industrywide expense increases, workforce shortages and volume disruptions, and these facilities also rely more heavily on government program reimbursement, the report said.
Rural hospitals often don’t have the clout to negotiate with commercial payers for higher rates, AHA wrote. Additionally, their patient populations more often rely on Medicare or Medicaid, which generally reimburse for less than the hospitals’ cost of care, the group wrote.
The Medicare-Dependent Hospital (MDH) program and the Low-Volume Hospital (LVH) program have both provided “vital” financial support to rural hospitals but are currently scheduled to expire Sept. 30.
Echoing recent letters penned to Congress by the AHA and the Federation of American Hospitals, the report characterized extensions of the two programs as a much-needed lifeline for rural hospitals that could otherwise be forced to close their doors.
“Although rural hospitals have long faced circumstances that have challenged their survival, we will most likely see more rural hospital closures as they attempt to adapt to the unprecedented challenges brought on by the COVID-19 pandemic,” AHA wrote in the report. “Rural hospitals also require increased attention from state and federal government to address barriers and invest in new resources in rural communities.”
The AHA’s report also reiterated the group’s contentious position that hospital consolidation is not driving rural closures. Less than half of the 134 rural hospitals that shut down from 2010 to 2020 were affiliated with a broader health system, AHA wrote, indicating “that of all the challenges facing rural hospitals that contribute to closures, being part of a system is likely not one of them.”
Rather, AHA said recent years’ uptick in mergers, affiliations and partnerships were an effort from rural hospitals to cut down costs and access capital or other resources needed to support their patients.
The AHA’s support for hospital consolidation grapples with numerous studies published over the last several years suggesting that rural hospital acquisitions can lead to service line cuts and fewer incentives for unprofitable services that improve care.