Many Americans depend on services from their local hospitals, which function as their safety net in case of an emergency and for some, a routine care facility. Critical Access Hospitals (CAH) are relied on by thousands of rural communities nationwide, yet 38% of these hospitals currently face severe financial distress or the potential for financial distress. In a previous Lowe Down article, The Great Shakeout or The Great Shakedown, it was discovered that compliance with new seismic safety regulations will most likely cause the percentage of total hospitals in severe financial distress to rise from 22% to 40%. At the Lowe Institute, we investigate why rural hospitals are more financially vulnerable than other types of hospitals and how this financial distress can impact local communities.
Other than compliance with new safety regulations, the increase of financial distress on rural hospitals is caused by a variety of factors.
According to the U.S. Census Bureau, in rural parts of the United States there are higher rates of uninsured people, causing higher levels of uncompensated hospital care. When patients are unable to pay their hospital bills, the economic stress shifts from the patients to hospitals. Moreover, as people are becoming more attracted to urban settings, rural populations are shrinking. The trend of hospital mergers and acquisitions that has ensued in an attempt to achieve minimum viable scale contributes to an increase in hospital closures. Specialized doctors are also more attracted to cities, which limits the breadth of care that rural hospitals can offer.
When any hospital falls into severe financial distress the most common course of action is to either eliminate certain services as a way to cut costs or close altogether. Unfortunately, The Medicare Payment Advisory Commission found that as many as 67 rural hospitals closed since 2013, and at least 14 were CAHs. While either of these options can have harmful effects on local communities, the impact is especially pronounced in rural communities. In rural communities, if a key service is cut or a hospital closes entirely, it forces local residents to travel much farther for treatment, creating what is commonly referred to as a “healthcare desert.”
Longer driving times to receive treatment not only stretch the wallet, but can have a direct impact on health outcomes. In the case of emergency services, getting trauma victims to a hospital within an hour has a positive impact on morbidity and mortality rates. Unfortunately, according to a recent study, rural hospital closures have been shown to increase mortality rates in the surrounding population by 5.9%, which is a direct result of longer drive times.
Negative health outcomes are also observed in rural populations when certain services are cut. Data shows that one of the most commonly cut services in trouble rural hospitals is obstetric care. While prenatal care is often still available, closure of obstetric units means that women must travel much farther than before to access intrapartum care (29 miles more, on average). Furthermore, studies have shown that higher risk, preterm births are more common in communities lacking obstetric units.
Another health service that often faces the chopping block in struggling hospitals is substance abuse and mental health services. In an assessment of CAHs’ community health needs, two of the top issues acknowledged by community members were substance abuse and mental health services, yet these very services were considered non-critical by many rural hospitals looking to downsize.
While most of the discussion surrounding the urban-rural divide in the US focuses on political leanings, economic growth rates, or demographics, it’s important to realize that many of these same forces can have implications for health as well. As hospitals begin to vanish from rural communities, these communities pay the price.