As rural hospitals continue to close, some health systems are making desperate attempts to address the problems of funding and the expanding number of patients during a simultaneous drop in the availability of physicians in rural areas.  How are leaders dealing with these struggles? We take a look.

 “Rural hospitals are especially vulnerable to closure due to payment cuts because of their smaller operating margin. A recent report on indicators describing hospital performance shows 673 rural hospitals that are currently at risk for closure, and of the 673 hospitals identified, 68 percent are critical access hospitals (CAHs). “ —  from “Facility Closure: How to Get In, Get Out, and Get What Is Important” published in Perspectives in Health Information Management a scholarly, peer-reviewed research journal by AIHMA.org.

 Last year, Becker’s Hospital Review gave a state by state breakdown of 77 closures for rural hospitals. According to that article, those states with the most closures are located in the south.  Recently the total was updated to 80.  You can see a map and get a complete list on this page at the Sheps Services for Health Services Research.   We counted 17 rural hospital closures in 2016 and 2017.

Also at the Sheps Center site, is an infographic introduced by this observation:  “Recognizing that many rural hospitals are the only health care facility in their community and that their survival is vital to ensure access to healthcare, it is important to understand where some hospitals are succeeding compared to those that are not, as policymakers try to craft sustainable models of health care for rural areas.”  The infographic (png) includes the chart showing disparity in profits of rural to urban hospitals, shown at right.  According to their research, “causes of the gap between rural and urban hospital profitability may include declines in patient volume, changes in Medicaid and Medicare reimbursement, and other factors that affect rural hospitals more than urban hospitals.”

One of those “other factors” could be physician shortages.  According to a recent article in RevCycle Intelligence, “CMS plans to bolster rural healthcare by alleviating hospital revenue cycle issues, such as physician shortages, hospital closures, and high uninsured rates.“ 

The article also quotes CMS Acting Administrator Andy Slavitt observing that, “Healthcare employment problems, such as physician shortages, have also driven care disparities in rural communities, Slavitt added. Even though 20 percent of the population resides in a rural area, only 10 percent of physicians practice in these regions. The lack of providers in rural areas represents 65 percent of the healthcare professional shortage.” 

But what that article did not include was reports of how CMS has a new formula which in some cases is showing that poorer hospitals need to repay the government as much as $400,000.  At least one powerful legislator is willing to fight back.  An article in the Olean Times Herald quotes Senate Minority Leader, Chuck Schumer, saying, “I care about our rural hospitals and they have a burden, so I always try to go to bat for them,” Schumer told the Times Herald after this speech Friday. “This idea of clawing back money that they don’t have would hurt the patients here. It would hurt all the people.” The article also states that Schumer will fight CMS in its effort to “pay back” money previously received from the federal government under a revised payment formula.

 “Of the 673 hospitals identified as vulnerable to closure in the iVantage study, 355 are in markets with great health disparities. “In other words, many of the hospitals most at risk of closure are located in communities that can least afford to lose access to care,” said iVantage.” — from an article in Becker’s Hospital Review, quoting from iVantage Health Analytics, a firm that compiles a hospital strength index based on data about financial stability, patients and quality indicators.

Even in Medicaid Expansion states, like California, rural hospitals and clinics are struggling.  California Healthline published a recent article detailing how the “stress of more patients” caused one system to become “overwhelmed”.  Shasta Community Health Center CEO C. Dean Germano explained that, “We were assigned patients, then assigned more patients. We quickly reached a point where we could not take on more new adult patients to our practice.“  Though they did boost their services to try to meet demand, Germano also said, “We are close to 20 primary care physicians short in our community, including our insured and Medicare populations. In a rural community, that’s a big number. “  Germano also discusses the possibility of using more Nurse Practitioners to solve the physician shortages in the story, saying he has a “mixed reaction” to that idea.

Physician shortages in rural areas coupled with Medicaid Expansion and declines in reimbursements or out and out requests to send back money to the federal government are making community hospitals a difficult puzzle for revenue cycle teams and CFOs.  We’ve redesigned our website this month with a focus on solutions for Hospitals, Healthcare Providers, Payers and Ambulatory Surgery Centers.  We’ll continue to keep an eye on this situation as the healthcare industry goes through more shakeups in 2017.