The Executive Suite: AHA: Rural hospital closures threaten care access

Tuesday, September 13, 2022

AHA: Rural hospital closures threaten care access

A report from the American Hospital Association found that between 2010 and 2021, 136 rural hospitals closed, with 19 of the closures coming in 2020. The majority (74%) of the closures happened in states where Medicare expansion was not in place or had been in place for less than a year.

Each closure has an outsized impact on the health and economic wellbeing of their communities, according to the AHA, because they provide affordable, quality health care close to patients’ homes and operate as economic anchors for the local community. In 2020, rural hospitals supported one in every 12 rural jobs in the United States while providing $220 billion in economic activity in rural communities.

The report states that rural hospitals are disproportionately impacted by issues such as coverage trends, workforce, and regulatory barriers. For example, rural hospitals face significant staffing shortages. Only 10% of physicians in the United States practice in rural areas despite rural populations accounting for 14% of the population. Nearly 70% of the primary care Health Professional Shortage Areas (HPSAs) are in rural or partially rural areas.

Shifting demographics are making it difficult for rural hospitals to be profitable, according to the report. Rural hospitals make up about 35% of all hospitals in the U.S., and nearly half of rural hospitals have 25 or fewer beds, with just 16% having more than 100 beds. Given that rural hospitals tend to be much smaller, patients with higher acuity often travel or are referred to larger hospitals nearby. As a result, in rural hospitals, the acute care occupancy rate (37%) is less than two-thirds of their urban counterparts (62%).

Compared to their non-rural counterparts, a significantly higher percentage of rural hospitals are owned by state and local governments — 35% compared to just 13% of urban hospitals. Moreover, a significantly lower percentage of rural hospitals are investor-owned. In 2020, just 11% of rural hospitals operated as for-profit compared to 34% of urban hospitals, according to the AHA.

In addition to lower patient volumes, rural hospitals often treat patient populations that are older, sicker and poorer compared to the national average, according to the report. For example, a higher percentage of patients in rural areas are uninsured and that 26% of uninsured, rural patients delayed seeking care due to cost. These delays contribute to sicker, and subsequently more costly, patients. These delays in care are further worsened by the fact that people in rural areas face geographic isolation and limited access to transportation to receive care at medical facilities.

Despite all these challenges, the report outlines a path forward for rural hospitals that includes a combination of value-based care models, less regulatory burden, and mergers or affiliations with larger regional health systems, but this strategy will not save every rural hospital.

“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,” the report reads in part. “Rural hospitals also require increased attention from state and federal government to address barriers and invest in new resources in rural communities.”