A sign supporting a small, rural hospital on the side of the road near Belhaven, North Carolina, a small coastal town.

[imgcontainer] [img:Pungo_Stoplight2_sm.jpg] [source]Photo by Hyun Namkoong/North Carolina Health News[/source] A sign supporting a small, rural hospital on the side of the road near Belhaven, North Carolina, a small coastal town. [/imgcontainer]

The number of patients admitted to small, rural hospitals is dropping rapidly, creating big changes in the economics of rural healthcare.

From 1996 to 2012, the average number of acutely ill inpatients at “critical access hospitals” fell by half, from an average of 8.7 to 4.35 per hospital per day.

If the current rate of decline continues, most of the inpatient business at these hospitals will be gone in the next decade.

Inpatient care accounts for a third or less of the revenue of critical access hospitals. But it’s a vital stream of money for institutions that operate in the black by only 1% of their budgets, on average.

Why are patient admissions declining, and how should we respond?

Critical Access Hospitals

A critical access hospital, or “CAH,” is a rural hospital with no more than 25 beds that meets certain criteria for distance from other hospitals or has been declared critically needed by its state’s governor.  Unlike most hospitals, a critical access hospital is paid whatever it costs to care for its Medicare hospitalized patients and, in many states, its Medicaid patients.   

The federal government developed the designation of critical access hospitals during the late 1990s, in part to address a spate of rural hospital closures. Now, with the drop in inpatients (plus some changes from Obamacare and the failure of some states to expand Medicaid), the problem of hospital closures is back in the news.

Where Have All the Patients Gone?

The inpatients who previously might have been treated at a critical access hospital are likely going to larger hospitals, as opposed to getting treatment at some other kind of community hospital.

Part of the change comes from an important “age cohort” effect. Twenty years ago, researchers found that people older than 65 thought their small, rural hospital was good or excellent.  But back then, people under 45 were less likely to think so. 

Now most of those elderly, local-hospital supporters are dead. And the group that didn’t think as highly of rural hospitals back then are probably seeking treatment elsewhere today. (The study by Amy Hagopian, Peter House and colleagues working in the University of Washington Rural Hospital Project from 1986 through 1994 surveyed 33,000 households in 56 rural communities concerning perceptions of 46 rural hospitals. It was published in 2000 in the Journal of Rural Health.)

There are other factors.  Hospital care has shifted toward higher technology that is available only in larger facilities. 

Hospital use overall has declined, to the detriment of smaller hospitals.

There have been unfavorable articles in major medical journals that reflect ignorance or bias throughout the research and publication process, as well as a current blitz of federal regulatory issues. 

But the long-term trend is bigger than any one of these factors. The reasons for decline in acute inpatient services are structural and ongoing. No single agency can change these patterns. They relate to the way patients seek care and the way doctors practice. The decline predates and overrides any particular regulation, legislation or administration.

Why Does It Matter?

When rural hospitals close, it affects more than just the patients who would have received inpatient care.

One issue is access to round-the-clock urgent and emergency care.  In a rural community that means an emergency room.  The way things stand now, under Medicare rules, you can’t have an emergency room without inpatient beds.  And Medicare rules determine how rural hospitals operate. That’s because older people who qualify for Medicare make up most of the patients for rural hospitals, and a lot of other payment programs follow Medicare rules.  Medicare won’t pay bills for emergency room services unless a facility has inpatients. 

[imgcontainer right] [img:Screen+Shot+2014-07-09+at+10.55.02+AM.jpg] [source]Source: Dr. Mark Holmes, UNC, based on data from the Centers for Medicare and Medicaid Services[/source] The chart shows the average daily census of acute inpatients at institutions that became critical access hospitals between 1997 and 2012. The average number of inpatients dropped from 8.7 to 4.35 during the period. The chart does not reflect skilled nursing patients. [/imgcontainer]

When a hospital closes, other problems with health services arise. Communities frequently lose medical clinics associated with the hospital, specialist practices and other treatment services like physical and occupational therapy.

Twenty years ago an individual hospital could reverse a decline in its own inpatient census by listening carefully to local people and responding to their needs. But it’s hard for me to imagine reversing the long term national decline with this kind of community-intensive intervention.

A few rural hospital CEOs are positioning their institutions to survive with no inpatients.  I think that is impressive and commendable.  I’m not an expert, but I’ll bet it takes the right manager in the right community, building the right physical plant and developing a strong fiscal base over a good many years to make that work.

A few hospitals in truly remote communities will continue to meet real local needs for inpatient services and do just fine.  Others will meet the growing need for hospice care of the terminally ill.  Some will survive by taking care of patients recuperating after acute care in larger hospitals.

But many more will fail if we continue on our current path. When that happens, rural communities lose far more than just inpatient beds.

What Can We Do?

What if we took this threat to rural hospitals as an opportunity to rethink how we structure the healthcare services these institutions provide? Instead of building community health services around an inpatient facility, we could use the model of a medical mall, which could provide emergency care, clinics, physical therapy and other treatments. To this list, I’d also add a telemedicine hub, behavioral health, substance abuse treatment, health promotion and related services The community should make up the list of services it wants and is willing to use and make sure are paid for.

When you take the traditional hospital bed rooms off the drawing board, the options really open up.  The health mall and emergency room could be located with a fire department, police department, ambulance base, town offices, the Laundromat, the supermarket, Walmart, the post office, or the Beijing Buffet. Or they may not.

Rural people need to come together with representatives of major health plans to argue for what they genuinely need and will use and begin lobbying for the necessary legislation to make that vision possible.

Given the variety of situations and needs, there may be a core with a range of options.  Sunflower County, Mississippi, is a whole lot different from Garfield County, Montana. 

This may also be an opportunity to deal with the foolishness of redundancies and lack of coordination. In some localities, it’s currently possible to have a community clinic run by a distant metro hospital on one corner, a Veterans Affairs itinerant clinic from another city on the second corner and a local clinic on the third corner, none of which can afford a podiatrist, and all of which need night and weekend coverage  The solution to this sort of nonsense reaches to the committees of Congress.

The answers won’t come from within the Medicare establishment.  The Center for Medicare and Medicaid Innovation treats rural America’s 60 million people as statistically insignificant.  The staff of the Medicare Payment Advisory Commission, “MEDPac,” seems to see critical access hospital cost-based payments as wasteful and morally wrong.

Who will step up to organize and lead this effort? First, to use the jargon of the trade, it’s a community needs assessment task.  Ideally a bunch of diverse communities should be sampled and the needs of that sample subset should be fleshed out.  I wouldn’t leave it to the doctors, nurses and hospital administrators.  It’s time for town meetings across the country.  The results of that process need to be cast into federal legislation.  Each step will take some years and sustained effort.   

We need a new vision of the core institution in rural health care.  It took about 14 years to set up our current system for small, rural hospitals, which evolved from the Montana Medical Assistance Facility program circa 1983, through the Rural Primary Care Hospitals program and, finally, the critical access hospitals program in 1997.  

That’s a lot of time. Some small rural hospitals will last that long. Some won’t. It’s time to quit the hand wringing and start coping.  Who will step up? 

Wayne Myers is a retired pediatrician and rural medical educator. He directed the federal Office of Rural Health Policy from 1998 through 2000 and was president of the National Rural Health Association in 2003. He and his wife, JoAnn, farm in rural Maine.

Creative Commons License

Republish our articles for free, online or in print, under a Creative Commons license.