Like their urban counterparts, rural hospitals are struggling financially.
And those continued struggles could mean a lack of access to health care for patients in rural areas.
According to a report issued February 25 by the American Hospital Association (AHA), American hospitals and health care systems will lose between $53 and $122 billion in revenue in 2021, mainly due to Covid-19 and reduced patient volumes. In 2020, hospitals lost an estimated $323 billion in revenue.
“When we talk about the historic financial challenges hospitals face, it’s about more than dollars and cents, it’s really about making sure hospitals and health systems have the resources needed to provide essential services for their patients and communities,” said Rick Pollack, AHA president and CEO, in a statement.
“During the pandemic, people have put off needed care, in some cases to the detriment of their health. In addition, the costs of labor and supplies have increased, adding to financial stress. Vaccines give us hope that the end is in sight, but hospitals need additional support to continue to provide access to care and to help get as many vaccine shots into arms quickly.”
For rural hospitals, the AHA said, financial challenges present a greater risk.
Rural hospitals serve as “economic anchors,” providing employment, buying from other local businesses and attracting new businesses. But they tend to have fewer patients, more of whom are on Medicare or Medicaid, which pays less than commercial insurance providers. The loss of a rural hospital is more than just the loss of healthcare access, the organization said. It could mean the loss of an area’s largest employer and consumer.
The AHA is asking Congress to add $35 billion to President Joe Biden’s “American Rescue Plan.” Currently, there is no help for hospitals in the $1.9 trillion stimulus plan. But the AHA says that money is critical to hospitals’ and health care systems’ financial health. With only about $4.4 billion left in provider relief funds from the CARES Act, hospital organizations say any new stimulus package should include direct, targeted assistance.
“While we appreciate the support and resources from Congress and the administration, many hospitals are severely struggling as Covid-19 continues to spread,” the organization said in a statement.
“ It is vitally important that America’s hospitals and health systems receive further support and resources to ensure that we can continue to deliver the critical care that our patients and communities are depending on while also ensuring that we are prepared for the continuing challenges we face from this ongoing pandemic.”
That assistance could be all that keeps some rural hospitals afloat. According to the Chartis Center for Rural Health, more than 450 rural hospitals are at risk of closing, with 200 of them considered high risk. Last year, in the midst of the pandemic, 19 rural hospitals closed, exceeding 2019’s record 18 closures. Since 2005, 179 rural hospitals have closed.
Most of those closures are in the south. Texas tops the list with 21 closures, with Tennessee (15 closures) and Georgia (8 closures) rounding out the top three. Kansas, Missouri, Oklahoma and North Carolina all have 7 closures each, while Alabama has 6 and Florida has 5.
On February 10, the Chartis Center released its “Crises Collide: The Covid-19 Pandemic and the Rural Health Safety Net,” which found that the pandemic is adding to the financial stress rural hospitals are under.
“All of the key metrics we track to assess the stability of the rural health safety net indicate that the situation for rural hospitals continues to be tenuous,” said Michael Topchik, National Leader at the Chartis Center. “Nearly half of all rural hospitals operate in the red; the speed with which closures are occurring has not abated; services are disappearing; and rural hospitals are struggling to provide the operational and financial resources required to adequately respond to Covid-19.”
In Kentucky, the state’s 68 rural hospitals make up more than half of all the hospitals in the commonwealth and employ more than 24,000 people. But the Kentucky Hospital Association estimates that between 16 and 28 of those hospitals were at risk of closure before the pandemic – between 16 and 41%of all rural hospitals in the state. Now, the association said, because of the pandemic, the financial outlook for those hospitals is even bleaker.
The KHA said that Kentucky hospitals lost an estimated $2.6 billion in 2020 due to Covid-19. But federal relief funds covered less than half of that.
Brock Slabach, senior vice president for member services at the National Rural Health Association (NRHA), said rural hospitals need better guidance from the federal government on how they are supposed to use those funds.
During the Trump Administration, the Department of Health and Human Services changed how Provider Relief Funds were to be spent, sometimes after hospitals had already spent the money.
“Many (rural hospitals) are troubled over lack of adequate guidance on the use of Provider Relief Funds and worried they may have to send large amounts of money back to the Federal Government,” Slabach said in an email interview.