One-in-five U.S. rural hospitals are at a high risk of closing unless their financial situation improves, according to a new Navigant analysis of publicly available data.
The analysis from the consulting firm, which examines the financial viability and community essentiality of more than 2,000 rural hospitals nationwide, suggests that 21 percent are at high risk of closing based on their total operating margin, days cash on hand, and debt-to-capitalization ratio. This equates to 430 hospitals across 43 states that employ 150,000 people, according to the analysis.
Also noteworthy is that a review of the community essentiality (trauma status, service to vulnerable populations, geographic isolation, economic impact) of rural hospitals at high financial risk reveals that 64 percent, or 277 of these hospitals, are considered essential to their community’s health and economic well-being. In 31 states, at least half of these financially distressed rural hospitals are considered essential.
The study’s authors believe that multiple factors have contributed to this crisis, such as: low rural population growth, payer mix degradation, excess hospital capacity due to declining inpatient care, and an inability for hospitals to leverage technology due to a lack of capital.
But they also present potential solutions, which include advancing legislation around telehealth reimbursement and such bills as the bipartisan Rural Emergency Acute Care Hospital (REACH) Act. Reintroduced in 2017 by Sens. Chuck Grassley, R-Iowa, Amy Klobuchar, D-Minn., and Cory Gardner, R-Colo., the REACH Act would create a new Medicare classification under which rural hospitals would offer emergency and outpatient services but no longer have inpatient beds.
There are various instances when health IT—such as patients meeting their providers virtually—has been able to help combat the significant challenges that rural healthcare providers face.
The study’s authors further suggest that rural hospital collaboration with academic and regional health systems offers another possible solution to the rural hospital crisis. Partnership areas include telehealth, revenue cycle, human capital, electronic health record use, physician training, and clinical optimization.
“Ensuring rural access demands that we embrace collaboration and technology,” Bruce Siegel M.D., CEO of America’s Essential Hospitals, said in a statement. “Telehealth and partnerships between rural hospitals and tertiary centers will be key to ensuring the right care is delivered at the right time."
For now, Southern and Midwestern states, including Mississippi, Alabama, Kansas, Georgia, and Minnesota, are projected to be impacted the most, according to the data.
