California lawmakers voted on May 4 to loan $150 million to at-risk hospitals throughout the state in order to help prevent closures.

This is partially in response to the Madera Community Hospital’s closure in December 2022, which left the county’s 160,000 residents to seek help from the next nearest hospital, 30 minutes away.

Similar situations have taken place across the state, with the California Hospital Association estimating that 20% of the states 400 hospitals are at risk of closure.

The problem is not just a West coast issue, as 170 of the nation’s rural hospitals closed in the 15 years prior to the COVID-19 pandemic, and now experts are bracing for a tsunami of closures.

According to the Advisory Board and Becker’s Healthcare, 631 rural hospitals are in danger of shutting their doors. That is 29% of the nation’s rural hospitals.

Prior to the pandemic, this was seen as a regional problem, as 60% of hospital closures were in southern states, but now it is a nationwide epidemic.

Texas and Kansas have the most at-risk facilities with 76 and 55, respectively, but New York (21), California (15) and Pennsylvania (12) are beginning to see their share as well. Most at-risk facilities are in danger of going out of business due to years of financial loss and depleted emergency funds.

Many hospital systems did well during the first two years of the COVID-19 pandemic because of increased patient volumes and government grants. While smaller hospitals received similar grants, the funds were barely enough to keep the doors open, and now patient volumes have returned to pre-pandemic levels.

The closure of a community-based hospital creates several problems.

First, closures eliminate health care resources in a community, causing residents to travel to a larger city for emergencies. Many of these rural facilities are the only hospital within 40-70 miles, which is a long distance to travel in an emergency.

The extra travel time will put an added strain on ambulance services as they will not have a fast, local turnaround time. As most rural communities have limited emergency services personnel and equipment, having ambulances transport more patients out of the area will reduce the chance that help is available in a crisis.

Second, the physicians in many rural communities wear multiple hats. They may have a private clinic, serve as the medical director at a nursing home, and take shifts at the local hospital. It is how many physicians are sustained financially.

Many rural clinics are dependent upon the hospital’s ancillary services like radiology, laboratory work and physical therapy. In short, keeping a hospital open is about more than just inpatient beds and the emergency room.

Hospitals are linked to most elements of a rural health care system. So, closures impact community-based physicians who are prone to leave communities without a hospital.

Third, the closure of rural hospitals will force patients to be rerouted and transported to larger medical center, which are often crowded and overwhelmed. This creates a back log of patients and impedes the quality of care.

As a result, larger hospitals will have to triage cases and prioritize services based on patient volumes. That means longer waits times and increased difficulty in securing services.

One of the largest issues facing rural hospitals is funding. Many are paid through reimbursements from insurance companies, Medicare and Medicaid. These reimbursements are based on the diagnosis and acuity of the patient and not necessarily how long the patient is in the hospital.

Smaller hospitals have less resources and cannot always stabilize a patient, treat them and get them ready to go back home quickly. In addition, if the rural hospital lacks capacity or services, they are forced to transfer the patient to a larger facility, missing out on the lion share of reimbursements.

This pattern works well enough for rural hospital that is part of a larger health system, as the profits stay in the system, but independent rural facilities need every dollar they can get to keep the doors open.

Another problem is that rural hospitals have to be staffed and have fully stocked supplies even when they have a minimum number of patients. Being in a perpetual state of readiness is expensive, but larger hospitals can handle this expense because they always have volume.

For example, if a rural hospital has a CT machine that is only used for 3-4 patients a day, this essential equipment is not paying for itself. At a large hospital, that same machine runs non-stop and is making money.

How hospitals get paid and turn a miniscule profit is mind numbing, so I won’t go into those details. What is clear is that our rural hospitals, which provide vital services to at-risk communities, have been struggling for over a decade, and now we have a crisis.

The health care ripple effect of rural hospital closures will see additional medical service providers move out of town, putting more people at risk. Therefore, as a nation, we need to step back and seriously look at how we fund and sustain our rural hospital safety net.

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