Analysis Shows One-in-Five U.S. Rural Hospitals at High Risk of Closing Unless Financial Situation Improves
Navigant study also suggests potential closures would have significant negative impact on community health and economic well-being, particularly in Southern and Midwestern states.
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
“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
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
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 optimization.
“Ensuring rural access demands that we embrace collaboration and
“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