“Predicting Financial Distress and Closure in Rural Hospitals,” a new article in the Journal of Rural Health by George M. Holmes, PhD, Brystana G. Kaufman and George H. Pink, PhD, looks at rural hospitals which have closed since 2010 at an increasing rate.
The researchers from the North Carolina Rural Health Research and Policy Analysis Center studied the financial performance of closed rural hospitals compared to those which remain open.
The study uses a sequence of financial events associated with risk in order to create an improved predictive model. The authors studied financial and community data for 2,466 rural hospitals from 2010 to 2013 and developed a risk assessment tool specifically for rural hospitals.
As the report states, “all of the ﬁnancial performance (lower proﬁtability, less reinvestment, poorer benchmark performance), government reimbursement (lack of critical access hospital status and lower relative Medicaid reimbursement), organizational characteristics (smaller hospital size), and market characteristics (lower market share, poorer economic condition in the market area, and smaller market size) variables are associated with a higher probability of ﬁnancial distress. The only ﬁnding contrary to that hypothesized is ownership: For-proﬁt status is associated with a higher probability of ﬁnancial distress, which is curious given previous research that showed for-proﬁts are most likely to offer relatively proﬁtable medical services; government hospitals are most likely to offer relatively unproﬁtable services; and nonproﬁts often fall in the middle.”
This study echoes the concerns the National Rural Health Association has about the increasing rate of rural hospital closures and the vulnerability to closure of far too many additional rural hospitals.
Continued Medicare cuts in hospital payments have taken their toll, forcing rural hospitals across the country to shut their doors. These hospitals provide essential, lifesaving local access to health care close to home for the 62 million Americans living in rural and remote communities.
Seventy-six rural hospitals have closed since 2010, and another 673 facilities – or one-third or rural hospitals – are at risk of closing. These hospitals serve vulnerable rural Americans who are older, sicker and poorer than their urban counterparts. Specifically, they are more likely to have a chronic disease that requires monitoring and follow-up care, making convenient, local access to care necessary to ensuring patient compliance with the services that are necessary to reduce the overall cost of care and improve the patients’ outcomes and quality of life.
Medical deserts are appearing across rural America, leaving many of our nation’s most vulnerable populations without timely access to care. Legislation is the solution. NRHA urges members of Congress to co-sponsor H.R. 3225, the Save Rural Hospitals Act, introduced by Reps. Sam Graves (R-Mo.) and Dave Loebsack (D-Iowa). NRHA asks that the Senate introduce a companion bill.
The Save Rural Hospitals Act will stop the impending flood of rural hospital closures and provide needed access to care for rural America by stabilizing rural hospitals (reversal of “bad debt” reimbursement cuts; permanent extension of current Low-Volume and Medicare Dependent Hospital payment levels; elimination of Medicare and Medicaid DSH payment reductions) and regulatory relief (elimination of the CAH 96-Hour condition of payment; modification of supervision requirements for outpatient therapy services at CAHs and rural PPS facilities; modification to the two-midnight rule and RAC audit and appeals process).
It will also create an innovative delivery model that will ensure emergency access to care and allow hospitals the choice to offer outpatient care that meets the health needs of their community with a payment structure that will allow these hospitals to remain open to serve their communities into the future.
NRHA urges members of Congress to save rural hospitals and patients by supporting this bipartisan bill.