Rural Hospitals on Life Support: A Disaster in the Making?

Alok S. Patel, MD


September 15, 2022

This transcript has been edited for clarity.

Access to care in rural areas has to be involved in any conversation about public health. We don't often hear about the incredible work being done in rural hospitals and the struggles they go through, even though 20% of Americans live in rural areas and depend on those health facilities.

Rural hospitals, like all hospitals, have their share of funding and staffing issues. When I initially saw headlines about the Rural Hospital Rescue Program, I was excited. Then I read about it, and I was confused, to say the least.

Let's back up really quickly. I'm not going to get into a big healthcare economics talk, but let's talk about what's happening with rural hospitals financially.

Since 2010, 135 rural hospitals have closed, with the majority closing between 2015 and 2021. It's actually getting worse. As of right now, about 450 rural hospitals are at risk of closing.

Here are some alarming data. According to an analysis of the rural health safety net by the Chartis Group, 46% of rural hospitals have a negative operating margin, and in some states, it's particularly bad.

In Alabama, Kansas, Missouri, and Arkansas, for example, 70%-80% of rural hospitals are operating in the red.

Going back to the Rural Emergency Hospitals program, the plan is to get rural hospitals to close all inpatient beds and instead focus solely on emergency and outpatient care. In exchange, rural hospitals get a monthly stipend and an increase in reimbursement.

The thought is that because unused inpatient beds in rural hospitals cost so much money to staff and maintain, closing them would save on overhead and potentially prevent closures.

The way this will all work, according to the Centers for Medicaid & Medicare Services (CMS), is a rural hospital would have to apply for a designation as a rural emergency hospital by essentially closing all inpatient beds. They would then be eligible for a 5% increased payment per outpatient service and a monthly facility stipend, which is set to increase in the future based on the market.

Given the fact that, for the average rural hospital, about 70% of the revenue comes from outpatient services, this plan might actually increase the hospital's bottom line.

CMS has yet to release all the details, including more stipulations about the stipend, but this plan is already being met with many questions and confusion about how it's even rational to close inpatient services in rural hospitals.

I asked around to my colleagues from multiple subspecialties, and nearly everyone had a story in which a rural hospital needed an inpatient bed. You might say, "Well, hey, what about crash inpatient beds or long-term observation units in the event of an emergency?"

According to a proposed rule by CMS, flexible swing beds will not be allowed for any hospital that wants that rural emergency designation. Really? Why not? I have so many concerns.

I work overnight in the hospital. I often get calls from a transfer center from rural hospitals, but the patients don't always come over.

Sometimes rural health doctors are comfortable taking care of patients, but just want to check in with the tertiary care center. Sometimes the patients themselves don't want to be transferred. Sometimes it's just something like an outpatient surgery that needs overnight monitoring. Sometimes weather gets in the way and we physically can't make a transport happen.

I've even had situations where there were no ambulances or helicopters available, so a patient had to stay inpatient at a rural hospital.

Also, look around. Many urban hospitals that would normally accept rural transfers are at capacity and short-staffed, and this problem is getting worse.

We saw an alarming example of this during the pandemic, when rural hospitals couldn't transfer acutely ill patients.

This is a more complex discussion, but the Rural Emergency Hospitals program also mentions nothing about the rural doctor shortage. In rural communities, there's only about one ICU bed per 10,000 people, 160 rural communities have no access to obstetric services, about 65% of rural communities have no psychiatry services, and you can imagine that subspecialty care is also lacking.

Simply put, I've yet to run into one physician or healthcare professional who thinks it's even feasible to close inpatient services in rural areas. I appreciate the conversation about protecting access to care, but this solution is a little short-sighted.

A perspective piece from the American Hospital Association talked about funding and protective efforts for rural areas, such as money directed to rural providers through the CARES Act and American Rescue Plan, Medicaid expansion, even increasing the resident workforce through the Consolidated Appropriations Act. These sound productive.

In the end, regarding the Rural Hospital Rescue Program, I suspect we'll learn more details and there will be more provisions.

Even still, I find it hard to believe that any hospital administrator is going to opt into this program, unless it means the difference between staying open or closing. That would be a harsh reality.

I want to hear what you all think, especially any rural healthcare professionals. What are your thoughts? Concerns? Comment below.

Alok S. Patel, MD, is a pediatric hospitalist, television producer, media contributor, and digital health enthusiast. He splits his time between New York City and San Francisco, as he is on faculty at Columbia University/Morgan Stanley Children's Hospital and UCSF Benioff Children's Hospital. He hosts The Hospitalist Retort video blog on Medscape.

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