There are several factors behind the financial struggles rural hospitals face right now, according to Harold Miller, CEO of the Center for Healthcare Quality and Payment Reform. They include increased costs to fight the pandemic, decreased money coming in from patients who are putting off doctor visits, and small hospitals that earn less per patient from private insurers than their urban counterparts,
“Most rural hospitals, even if they’re making profits, are making very small profits and typically do not have significant reserves in place,” Miller says. “And the hospitals that we’ve identified as being at risk, are ones that have been losing money for several years.”
The policy center’s report “Rural Hospitals At Risk of Closing” was updated in January with quarterly records from the Centers for Medicare and Medicaid Services. Hospitals identified in the report as being at “high risk” or “immediate risk” of closing include Southern Coos Hospital and Health Center in Bandon and Mad River Community Hospital in Arcata, in addition to others in Curry and Lake counties.
Miller says a major cause for financial struggles at rural hospitals is that they earn lower profits on basic services like emergency departments – a critical service in a rural community, but one that requires basic staffing and equipment costs that urban hospitals can more easily translate to profits.
“In a small rural area, you don’t have as many emergency department visits as you do in a larger urban area. So, you don’t generate as many visits and you don’t generate as much revenue for those visits as you do in an urban area,” Miller says.
He says 130 rural hospitals have closed around the country over the past decade. The solution, Miller says, is to convince private health plans to pay enough that rural hospitals can serve their communities.
“The hospitals are not losing money because they’re too expensive, they’re losing money because they don’t get paid enough to be able to sustain those services.”
