February 27, 2020; Daily Yonder
As a global pandemic looks increasingly likely, a new study from Chartis Center for Rural Health, a healthcare research and consulting group, points to a major vulnerability of the US health care system. The center identified more than 450 rural hospitals as “at risk for closing.” That’s 21 percent of the 2,160 hospitals that serve rural areas.
States that have declined to expand their Medicaid programs, despite the incentives in the Affordable Care Act, are most vulnerable. These states tend to be in Midwestern and Southern states. In Texas and Tennessee, for example, half of rural hospitals are at risk of closing. Over 40 percent of rural hospitals in Florida, Missouri, and Mississippi were found to be vulnerable.
Using 16 specific financial and operational variables, including facility age, operating margin, and expected Medicaid revenues, the Chartis Center analysis compared the performance of currently operating rural hospitals to over 100 hospitals that had closed since 2010. Examining data from the three years prior to closing, the researchers found precipitous financial and operational declines the year before those hospitals closed. They looked for similar declines in currently operating hospitals.
Ranking the hospitals accordingly, the researchers identified 216 of the hospitals as “most vulnerable” and 237 as “at risk.” Among the “most vulnerable” are 97 critical access hospitals and 119 rural & community hospitals. The “at-risk” hospitals include 92 classified as rural & community hospitals and 145 critical access hospitals.
Over the last decade, 120 rural hospitals have closed. The crisis has become more severe in recent years, with 34 closing in the last 24 months. According to Michael Topchick, national leader of the Chartis Center, “Our model provided us with the opportunity to conduct a more nuanced examination of the path toward closure and better understand the breadth of vulnerability across the nation.”
The Chartis study confirms earlier research from the University of North Carolina’s Cecil G. Sheps Center for Health Services Research that hospitals are most likely to close in states that have not expanded Medicaid. As stated in the report:
“The closure crisis has affected rural hospitals located in non-Medicaid expansion states much more so than in states that have expanded Medicaid. Our regression model showed that being located in a Medicaid expansion state decreases the likelihood of closure by 62 percent on average.”
The closure of rural hospitals hurts communities not only by reducing access to critical health care resources—particularly during a crisis—but it also undermines rural economies. Alison Davis at the newly launched Center for Economic Analysis for Rural Health at the University of Kentucky, explained to the Daily Yonder, “hospitals are an economic development entity and many times are one of the largest employers in a rural town, second only to the school district.” Sheps data suggest that hospital closures reduce per capital income in rural communities by four percent, while increasing local unemployment by 1.6 percent.—Karen Kahn