The decline of rural hospitals has been a slow-moving train wreck. It’s now accelerating.
Since 2010, nearly 100 rural hospitals have closed their doors. The closures have resulted in statistics like this — half of all rural counties lack an obstetrician — that make the United States sound like a third-world country. As bad as that may seem, things are likely to get much worse, and soon.
According to a new analysis that I conducted with my colleagues at Navigant, 21 percent of rural hospitals nationwide are currently at high risk of imminent closure. It’s more than double that in states like Alabama, Mississippi, and Alaska, where upward of half of all rural hospitals are at high risk of closing. Overall, this adds up to about 430 hospitals in 43 states that collectively provide care for millions of Americans and employ more than 150,000 people.
Some argue that the closure of many of these hospitals is warranted. That it’s a simple case of supply and demand and the market will cover any potential gaps in coverage.
But our analysis makes a strong case against that line of thinking. Instead, we show that two in three of these hospitals are considered highly essential to their communities. That’s 277 hospitals nationwide, and more than 20 apiece in two of the states most affected, Kansas and Georgia. If these hospitals close, already fragile rural economies will crumble while residents will be forced to travel long distances for emergency and inpatient care.
That all of this is happening during the longest uninterrupted period of economic growth in U.S. history should be added cause for concern. In other words, what may have recently looked like only a flashing red light should now be accompanied by a blaring siren.
There’s no one answer for how we got to this point. The factors that have led to the rural hospital crisis are as complex as the ones that helped hollow out the communities they’re meant to serve. In some ways, they’re interconnected.
I recently witnessed a scenario in which a large furniture manufacturer had spent years working with local leaders to land a new facility in a depressed rural area. When the community’s only hospital closed, the deal disappeared along with it.
A loss of agrarian and manufacturing jobs has led to a corresponding alteration in who is paying for health care. Put simply, the people who remain in rural communities tend to be those who don’t have the means to leave: the very old, the very young, and the poor, all of whom are unlikely to have private insurance, if any insurance at all.
Added to that demographic disadvantage are the types of facilities that serve these communities. Many rural hospitals were originally built in the post-World War II era to provide a level and volume of care that is no longer needed, leaving them overstaffed and underused. For instance, the average rural hospital today has 50 beds and 320 employees yet serves only seven patients a day. It’s simply not a sustainable equation.
There’s also the simple fact that these already budget-strapped facilities weren’t able to keep up with technological trends. The ascendance of managed care and an increased focus on outpatient services has made these mostly empty facilities appear to be inessential and behind the curve, even as the jobs they provide remain vitally important to the local economy.
All these things were known before our analysis, if only vaguely. But an assessment of the economic health of all rural hospitals in America forces us to pay attention. Hospital administrators, local political leaders, and statewide public servants can no longer claim ignorance. The predictive data are available and no political leader — at any level — should be surprised to learn of the possible demise of his or her local hospital. They must act now. The question is, what should they do?
The answer may come in the form of the rarest sight in contemporary civics: a bipartisan bill.
In 2017, Sens. Chuck Grassley (R-Iowa), Amy Klobuchar (D-Minn.), and Cory Gardner (R-Colo.) reintroduced the Rural Emergency Acute Care Hospital (REACH) Act. It was meant to help rural hospitals by allowing them to sidestep a regulatory hurdle that had become an added burden.
Many rural hospitals are designated as critical access hospitals, meaning they must provide a certain number of inpatient beds as well as an emergency room. That requirement often forces hospitals that could still be turned around to close instead. The REACH Act offers them another option: resize and stabilize.
Under a new classification known as the rural emergency hospital, these hospitals would be able to rid themselves of the excess inpatient beds that eat up space and resources. Instead, they’d simply have to maintain enough operational flexibility to move patients to larger hospitals and academic health systems while focusing on outpatient services.
Progress on the REACH Act has been slow. It’s currently stuck in the gears of Senate procedure, having been read in but not voted upon by the appropriate committee.
The REACH Act doesn’t solve all problems for rural hospitals. Nor does it offer the only workable solution — better reimbursement around telehealth could help promote partnerships between rural hospitals and their closest academic health systems. But what does distinguish this piece of legislation is the simple fact of its existence.
Whereas the strategy in prior years has been to hope the problem goes away, the REACH Act acknowledges the train wreck that could and should have been avoided years ago, and now can no longer be ignored.
Dave Mosley is a managing director with Navigant, a global professional services firm.