March 7, 2019– It is a statistic that many will find startling, or even frightening: one in five rural hospitals in the U.S. are at risk of closing their doors unless their financial situations improve. That’s according to a recent report by Navigant, a global consultancy firm based in Chicago.
The analysis looked at more than 2,000 rural hospitals across the nation to gauge their financial viability as well as how essential they are to their communities. Navigant concluded that 21 percent are at high risk for closure, with hospitals in the South and Midwest at particular risk. And of the hospitals that are considered at-risk, 64 percent are deemed to be essential to their communities. That means the loss of services they provide to vulnerable populations or economic effect they have on the region could not be assumed by other area facilities.
Unfortunately, these stark figures will not come as a surprise to rural hospital leaders or to the dedicated health care providers who treat patients in thousands of small towns and remote areas of the country. For years, researchers have been sounding increasingly loud alarm bells on rural hospital closures. Economic stresses have contributed to the closures of nearly 100 rural hospitals since 2010, according to tracking data from the Cecil G. Sheps Center for Health Services Research at the University of North Carolina.
When a rural hospital closes, it is devastating to its community. Residents often lose the only place where they can receive trauma care in emergencies, when every minute counts. Patients who receive complex health services suddenly are looking at trips of 100 miles or more to find the next nearest hospital or clinic that offers that care. Of course, the doctors, nurses, pharmacists, and other professionals who work at the hospital suddenly are out of a job. And because the hospital often is the area’s biggest employer, the economic health of the community is severely harmed.
The lack of available care often is a deterrent for people thinking about moving to a small town and is an incentive for younger residents to consider moving elsewhere. Those living with low incomes and the elderly are often most at risk. A 2006 federal study estimated the economic impact of a hospital closure on a rural community is a 4 percent decline in per-capita income and a 1.6 percentage point rise in unemployment.
Rural hospitals are working hard to adapt to population and economic trends. “Ensuring rural access demands that we embrace collaboration and technology,” said Bruce Siegel, MD, CEO of America’s Essential Hospitals. “Telehealth and partnerships between rural hospitals and tertiary centers will be key to ensuring the right care is delivered at the right time.”
But just as members of rural communities need their lifelines to stay intact, so do the rural hospitals that serve such a vital health care need. Those hospital lifelines include the 340B drug pricing program.
When it enacted 340B, Congress made clear it was intended to help safety-net hospitals stretch scarce resources to treat more patients. As resources in rural areas become even scarcer and rural hospitals hang on by the skin of their teeth, the future of those hospitals becomes even more intertwined with the future of 340B.
In 2010, Congress expanded the number and type of hospitals considered 340B covered entities to include more than 1,000 rural facilities such as critical access hospitals, sole community hospitals, and rural referral centers. In a 2017 survey conducted by 340B Health, 74 percent of rural hospitals reported using their 340B savings to help keep their doors open. More than half (55%) said cuts to their 340B savings would directly impact their ability to remain open.
While there is no single policy decision that lawmakers can make to protect vulnerable rural hospitals, maintaining the financial support from 340B is clearly essential.