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Why Rural Hospitals are Struggling

Why Rural Hospitals are Struggling
By Aditya Singh • Issue #10 • View online
Rural America is facing a healthcare access crisis that many in the cities and suburbs simply have not heard of. While many Americans are familiar with the high cost of health insurance and insane out-of-pocket costs for healthcare, those out in the country are finding that the options to get healthcare are scarce, and it’s probably getting worse with hospitals shutting down across rural America.

Why Rural Hospital Closures Matter
The closure of a hospital means that people have to go further to get treatment, and it’s a vicious cycle that disproportionately affects those with lesser means and those of older age.
The impact is not as simple as “just driving longer”, because when the travel time increases to almost an hour, it discourages people from getting treatment when they may need it. Such distances also prevent adherence to follow-ups, referrals, and diagnostic care that could soften the impact of long-term conditions.
There’s also the implications of the cost of travel which may include gas, food, childcare, and lost income. In the event that you need emergency services, a 40 minute ambulance live can, and has, cost lives.
In all, the higher barrier to seeing a doctor can be attributed to a number of health inequities that rural Americans face. From reduced cancer prevention and hypertension management to poorer mental health treatment options, the same tools which many suburban and urban residents have to get healthcare are simply not available. Combined with higher rates of poverty, and it’s no wonder that the quality of health outcomes are abysmal for large swaths of the country.
Reduced Revenues
So why are rural hospitals closing down?
At the end of a day, to stay afloat, hospitals need revenue to offset costs, whether that revenue be from insurance companies reimbursing care or federal aid.
In rural America, many counties are facing economic stagnation, and it’s fueled by a wide range of factors. People moving out of rural counties means less tax revenues for local governments to invest in local services. A smaller population also means less engagement with local businesses that has knock-on effects of lower income and employment.
The economic drain that rural counties face mean that poverty rates are higher, and fewer people have access to health insurance.
These factors have significant implications for hospitals. People are less likely to see a doctor when facing economic challenges, and when people come into the ER without health insurance, there is no one to compensate the hospital for care it must provide.
As one would expect, lower incomes and lower populations mean less utilization of facilities like the operating room which generate high margins and could offset the cost of other hospital operations.
Labor Shortages
Financial troubles also make other industry-wide challenges even more intense for these rural hospitals.
The clinician burnout crisis, which was supercharged by the pandemic, has led to a clinician labor force that’s shrinking at a rate not seen in recent memory. As positions open up for roles from nurse practitioners to doctors, rural hospitals do not have the funds to compete with the higher salaries that urban and suburban hospitals can offer.
Attempts to get these clinicians onboard have been aggressive. Take this quote:
“Nearly 70% of survey respondents say their hospital has turned to sign-on bonuses in the ballpark of $16,000 to $20,000, a majority (39%) are in the $1,000 to $5,000 range, followed closely by 34% in the $6,000 to $10,000 range,” Chartis’ report said. 
Even with such generous bonuses, greater commute times, lower long-run salaries, and fledgling morale have prevented much improvement in staff shortages.
Selloffs and Aid
The rural hospital crisis has introduced dozens of closures across the country. Since 2010, Texas has seen 21 closures while Tennessee comes in second for rural hospital closures, at 16.
Large health systems have moved into the more profitable rural hospitals to take over operations while those with deeper problems have been left to legal troubles with insurers and law enforcement agencies for questionable billing practices.
In other cases, the hospitals are being sold off to whoever the highest bidder may be. Because there are often few bidders, the hospitals are sold for next to nothing to organizations with limited experience running hospitals. After a brief stint of trying to eek out a profit, the hospital may be sold off again.
This revolving door of shoddy managers degrades care quality and reputation, often irreparably and whilst worsening the chances for rural residents to get quality healthcare.
Some notable exceptions hold. Some officials in Tennessee are hopeful about a revival of a community hospital led by Braden Health, however the scope of the problems of rural hospitals likely require public support, especially when in many cases, closures were driven by corporate business decisions as opposed to local needs or planning.
Federal COVID-related aid helped some hospitals stay afloat amidst the pandemic, but once again, those were temporary measures.
Because many individuals receiving care in rural America may have low incomes or are elderly, the policies of the Medicaid and Medicare programs have massive effects on these hospitals. Recent years have seen Medicare cut the amount it reimburses hospitals for certain treatments.
Even more detrimental, in an effort to reduce unnecessary readmission of patients to hospitals, Medicare reduced reimbursement to hospitals with high readmission. However, because individuals in rural America cannot as easily participate in follow-ups and preventative services, readmissions remain high, and instead of getting crucial support to build out access to care that would drive down readmissions, this incentive program has hurt rural hospitals.
As is often the theme in healthcare policy, public support for rural healthcare services will mean public support to transition to new strategies that reward keeping patients out of the ER and prioritizing value over volume of patient care. This also would require support to build out community-based healthcare services that would make rural America less dependent on centralized hospitals while giving rural residents a better opportunity to manage healthcare rather than reacting to emergencies.
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Aditya Singh

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