Navigant study also suggests potential closures would have significant
negative impact on community health and economic well-being,
particularly in Southern and Midwestern states.
CHICAGO--(BUSINESS WIRE)--Feb. 20, 2019--
One-in-five U.S. rural hospitals are at a high risk of closing unless
their financial situation improves, according to a new Navigant (NYSE:
NCI) analysis of publicly available data. The study also shows that 64%
of these at-risk rural hospitals are considered essential to the health
and economic well-being of their communities.
The analysis, which examines the financial viability and community
essentiality of more than 2,000 rural hospitals nationwide, suggests 21%
are at high risk of closing based on their total operating margin, days
cash on hand, and debt-to-capitalization ratio. This equates to 430
hospitals across 43 states that employ 150,000 people.
Further review of the community essentiality (trauma status, service to
vulnerable populations, geographic isolation, economic impact) of rural
hospitals at high financial risk suggests 64% or 277 of these hospitals
are considered essential to their community’s health and economic
well-being. In 31 states, at least half of these financially distressed
rural hospitals are considered essential.
Southern and Midwestern states, including Mississippi, Alabama, Kansas,
Georgia, and Minnesota, are projected to be impacted the most, the data
here for detailed state-based data.
“Our analysis shines a new light on a rural hospital crisis that must be
addressed and could significantly worsen with any downturn in the
economy,” said co-author David Mosley, managing director at Navigant.
“Local, state, and federal politicians, as well as health system
administrators, need to act.”
Legislative action, health system partnerships needed
Multiple factors have contributed to this crisis, the study suggests.
They include low rural population growth, payer mix degradation, excess
hospital capacity due to declining inpatient care, and an inability for
hospitals to leverage technology due to a lack of capital.
Potential solutions presented by the authors include advancing
legislation around telehealth reimbursement and such bills as the
Emergency Acute Care Hospital (REACH) Act. Reintroduced in 2017 by
Sens. Chuck Grassley, R-Iowa, Amy Klobuchar, D-Minn., and Cory Gardner,
R-Colo., the REACH Act would create a new Medicare classification under
which rural hospitals would offer emergency and outpatient services but
no longer have inpatient beds.
Rural hospital collaboration with academic and regional health systems
offers another possible solution to the rural hospital crisis.
Partnership areas include telehealth, revenue cycle, human capital,
electronic health record use, physician training, and clinical
“Ensuring rural access demands that we embrace collaboration and
technology,” said Bruce Siegel MD, MPH, CEO of America’s Essential
Hospitals. “Telehealth and partnerships between rural hospitals and
tertiary centers will be key to ensuring the right care is delivered at
the right time."
“Collaborating with academic and large health systems allows rural
hospitals to leverage the resources of these better funded peers and
develop a hub and spoke network of clinical care that augments rural
services,” said Navigant Managing Director and co-author Daniel
DeBehnke, MD, MBA, a former academic health system CEO.
Navigant Consulting, Inc. (NYSE: NCI) is a specialized, global
professional services firm that helps clients take control of their
future. Navigant’s professionals apply deep industry knowledge,
substantive technical expertise, and an enterprising approach to help
clients build, manage, and/or protect their business interests. With a
focus on markets and clients facing transformational change and
significant regulatory or legal pressures, the firm primarily serves
clients in the healthcare, energy, and financial services industries.
Across a range of advisory, consulting, outsourcing, and
technology/analytics services, Navigant’s practitioners bring sharp
insight that pinpoints opportunities and delivers powerful results. More
information about Navigant can be found at navigant.com.
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Source: Navigant Consulting, Inc.
Navigant Investor Relations