For the Southwest Georgia Regional Medical Center, the last straw was the COVID-19 pandemic, which strained the critical access hospital’s already-precarious finances past the breaking point. In Florida, two hospitals closed inpatient non-emergency services after being bought out by the HCA hospital chain. In Tennessee and West Virginia, financial problems combined with the strain of the pandemic led two more rural hospitals to shut their doors.
Of the 20 rural hospitals that closed in 2020, 13 were in the South, according to data from the Sheps Center at the University of North Carolina at Chapel Hill, which defines a closed hospital as one that no longer offers inpatient services. Tennessee was the Southern state most affected, losing four rural hospitals last year alone.
“One person mentioned that right now, the nearest hospital is 25 miles away. And the community is deflated and angry, because it feels like nobody cares if they die,” said Kinika Young, the senior director of health policy and advocacy at the Tennessee Justice Center, which last fall conducted a phone survey of rural communities that had lost or were at risk of losing a hospital.
Rural health care providers in the South, and across the nation, warned from the onset of the COVID-19 pandemic that they were financially vulnerable, as Facing South reported a year ago. “It is becoming absolutely dire,” Maggie Elehwany, then the government affairs and policy vice president for the National Association of Rural Hospitals, said at the time.
The factors that lead rural hospitals to close are complex, and they can vary from community to community. Rural communities themselves are diverse in population, needs, and infrastructure. “There’s just all kinds of ways, from the demographics to the economics to the existing infrastructure to the geography, that will make needs differ,” said George Pink, a professor at UNC-Chapel Hill’s Department of Health Policy and Management and a senior research fellow at the Sheps Center. Because of this, he said, there’s no silver bullet policy solution that will fix rural health care’s precarity problem. Instead, he said, it will take a combination of federal and state policy initiatives, and more research on what works and what doesn’t.
The South’s rural hospitals have long been among the most vulnerable to closure, in part because the region’s rural populations have particularly high rates of poverty and uninsurance. There are racial disparities, too: A 2015 Sheps Center report found that hospitals were more likely to close entirely, with no outpatient care provided, in markets with higher proportions of Black patients. Just five Southern states have expanded Medicaid, the joint federal-state health care program for people living in poverty, which many advocates believe is one of the most effective steps a state can take to avoid losing rural health access.
“In states that have expanded Medicaid, the rate of rural hospital closures is six times less than in states that haven’t expanded,” said Young, citing findings from a 2018 study. “Positioning Medicaid expansion as a potential solution to the struggles that rural hospitals are facing has been a big rallying cry” for groups like the Tennessee Justice Center, she said.
The American Rescue Plan, the COVID-19 stimulus package signed into law earlier this month, incentivizes states that have not yet expanded Medicaid to do so by increasing their reimbursement from the federal government for two years. An National Law Review analysis of the legislation found the slight increase probably won’t be enough incentive for non-expansion states to expand Medicaid. “However, ballot initiatives, a change in the governor’s mansion, or change in control of the state legislature could lead additional states to Medicaid expansion,” it said.
In Tennessee, the legislature tried to overhaul the state’s Medicaid program by getting approval from the Trump administration back in January to receive Medicaid dollars through a block grant, giving the state a fixed annual payment rather than open-ended funding in exchange for greater flexibility over the program. It’s an approach favored by conservatives who believe that states freed from strict federal oversight can find ways to provide care more efficiently. But that approval could be rescinded under Biden. And many advocates would rather see the certainty of expansion anyway. The money provided under the block grant approach “just doesn’t add up” to funding available under an expanded Medicaid program, Young said.
There are three basic sets of factors that tend to make rural hospitals vulnerable to closure, Pink said. First, there are market factors, when a hospital serves a shrinking or highly uninsured population. Then there are hospital factors, when hospitals struggle to recruit or retain employees, contend with old buildings and/or equipment, or struggle with fraud or safety concerns.
“The most important, though, is the financial bucket,” Pink said. “These hospitals, what they have in common is they tend to have high rates of charity care, of bad debt, they may have substantially high levels of debt, they generally have low profitability over a long period of time, and they just literally run out of cash.”
The pandemic exacerbated these long-term financial factors. Many states required hospitals to cancel or postpone elective surgeries and other outpatient and primary care visits, which typically make up a major part of hospital revenue streams. Expenses increased because hospitals had to purchase personal protective equipment and ventilators, and in some cases hire temporary staff when others were in quarantine. And hospitals ran out of cash.
Four of the 13 rural Southern hospitals that closed in 2020 cited financial difficulties worsened by COVID-19 as a reason for shutting their doors.
These closures will have long-term effects. In many rural communities, hospitals are a primary employer. They support businesses, families, and sometimes the entire economic infrastructure of a rural community.
“When a hospital closes in a rural community, that’s it. The people in the community don’t have a lot of other options, typically, that they can replace that care with. They’re then traveling 15, 20, 30 miles,” said Pink.
Young with the Tennessee Justice Center said that the closures tend to have a domino effect. Some of the people her group spoke to during the fall phone survey said that businesses were considering leaving their county, and that even preventative care services were less accessible now that the hospital was gone, she said.
“People in rural communities don’t want to be forgotten. They have been hit hard by the pandemic because of the geographic isolation and the fact that they were already dealing with lower incomes and less access to care,” she said. “When you add a pandemic on top of that, they’re basically at their breaking point, and they’re looking to their leaders for help, for attention.”
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