Rural hospitals are literal lifelines for the communities they serve. And yet, they keep closing across the country. A new report from the American Hospital Association (AHA) is sounding the alarm, as 136 rural hospitals have closed their doors since 2010, and a record 19 closed in 2020 alone.
A key factor is simple demographics: rural hospitals are smaller, see fewer patients, and tend to see older, sicker, and poorer patients than the national average. But the AHA report also cites another reason: reimbursement rates.
Many patients of rural hospitals are covered by Medicare and Medicaid — which pay less for healthcare than commercial payors. And in the commercial market, “Rural hospitals are often forced to accept below average rates or are left out of plan networks entirely. Rural hospitals with low commercial patient volume and a lack of market power are often forced to ‘take it or leave it’ when large insurers refuse to negotiate,” according to the report.
Without fair reimbursements from commercial carriers, as well as increased investment by state and federal agencies to preserve the important services these facilities provide to their communities, the report lays out a dire warning: “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.”
In other words, rural hospitals have high costs, but payors – whether government or commercial – leave them high and dry. This, combined with aging infrastructure and staffing shortages, can be the death sentence for a rural hospital.
It’s a trend with serious consequences. When rural hospitals close, patient care suffers. But closures don’t just impact the health and well-being of rural patients, they also threaten their economic stability: In 2020, rural hospitals provided one in every 12 rural jobs in the U.S.
If rural hospitals continue to face sicker patients and lower reimbursements from insurance companies, this alarming trend will only continue — and more local economies will suffer.
