The Ironside HR Blog

The Facts

• Currently there are 1,821 operating rural hospitals
• 450 of these are in extreme risk of closing
• 2019 – A total of 19 rural hospitals closed
• 2020 – 1^st quarter – 19 additional closures
• If the 1^st quarter trends continue there could be an additional 57 closures by the end of 2020
• 49% of current rural hospitals are operating at a net loss

The Causes

• Covid-19 – Many Rural Hospitals utilize elective surgery as a means to obtain operating funds. The virus has shut done elective surgeries nationwide.
• High rates of uninsured residents.
• Rural Hospitals are unable to upgrade their facilities because of funding as well as obtain

Talent for the hospitals.

• Uninsured people are relying on the Federal Emergency Medical Treatment and Labor Act of 1986, hospitals are required to screen and stabilize patients regardless of their insurance status or ability to pay, which means hospitals often end up absorbing the costs associated with those patients. This is called “bad debt.”
• Affordable Care Act and its Medicaid expansion increases the cost of Medicare, many states refused to accept increase in Medicare because a large portion of their population were either unemployed with more dilapidating health issues or both.
• Decreasing population in rural areas, urbanization has become popular among younger generations.

The Cure

• 1130 – To amend title XVIII of the Social Security Act to create a sustainable future for rural healthcare
• The creation of a rural emergency hospital 18 designation under the Medicare program will allow 19 facilities in rural areas to provide emergency medical 20 services without having to maintain inpatient beds.
• In addition to providing emergency care, 22 rural emergency hospitals could convert the space 23 previously used for inpatient services to provide 24 other medical services including, but not limited to, 25
• observation care, skilled nursing facility care, infu-1 sion services, hemodialysis, home health, hospice, 2 nursing home care, population health, and telemedi-3 cine services.
• Nothing in this subsection or section 1834(v)(3) 7 shall be construed to prohibit a Rural Emergency Hospitals from providing extended care services

The Health Bipartisan Policy Center further recommends the following steps:

• Stabilize rural hospitals. Provide immediate financial relief to hospitals for 3 years in order to transform to meet the community’s needs. This includes suspending 2% Medicare payment cuts and Medicare bad debt payment reductions beyond 2020 and increasing reimbursement rates by 3% for Medicare Critical Access Hospital services.
• Transform rural hospitals. Following a comprehensive community needs assessment, allow rural hospitals to transform from full-service hospitals to outpatient and emergency care centers with the flexibility to choose different payment methods; allow rural health clinics or Federally Qualified Health Centers to add emergency services and get paid at hospital level rates, if a local hospital closes.
• Stop obstetric unit closures. Reimburse rural hospitals for obstetric care in shortage areas at national median commercial rates; increase education funds to equip primary care clinicians with skills in prenatal and maternal services.
• Incentivize clinicians to stay in rural areas. Provide federal tax credits to encourage rural physicians, physician assistants, and nurse practitioners to stay in rural communities; expand J-1 visas from 30 to 50 to allow international medical graduates to stay in the U.S. for 3 more years to practice in rural areas.

The workforce issue is a particularly critical one, health policy consultant and BPC fellow Chris Jennings said during the BPC briefing. “Rural areas have only 40 primary care physicians for every 100,000 people compared to 53 in urban areas, but that gap is so much greater for specialists,” he said. “Rural areas have 30 specialists for every 100,000 people compared with 263 specialists in urban areas.”

Even after the pandemic is over, “I think we’re going to see changes that have started as a result of the COVID experience that are not going to go away,” said Gail Wilensky, PhD, senior fellow at Project HOPE, during the BPC event. “I don’t think we’re going to revert back to some restrictions because we’ve all been able to experience some of the benefit that allow for greater flexibility. Telehealth is going to change — it’s been very important in some rural areas for years, and it has improved significantly since I first observed it in the early 1990s … the transmission capability has improved significantly.”

“We’re going to have to sit back when we’re out of this COVID emergency and understand the benefits that we have experienced going through this period and choose to adopt those that have been very helpful,” she said. “It’s going to fundamentally change how healthcare is delivered.”