Hundreds of Hospitals Could Close Across Rural America
Hundreds of rural hospitals across the United States are teetering on the edge of closure, with their financial status increasingly in peril, a new report reveals.
More than 200 rural hospitals are at immediate risk of closure because they aren’t making enough money to cover the rising cost of providing care, and their low financial reserves leave them little margin for error, the Center for Healthcare Quality and Payment Reform report states.
Overall, more than 600 rural hospitals — nearly 30% of rural hospitals nationwide — are at risk of closing in the near future, according to the report.
“Costs have been increasing significantly and payments, particularly from commercial insurance plans, have not increased correspondingly with that,” said Harold Miller, president and CEO of the Center for Healthcare Quality and Payment Reform (CHQPR). “And the small hospitals don’t have the kinds of financial reserves to be able to cover the losses.”
The COVID-19 pandemic actually provided temporary relief to cash-strapped hospitals, thanks to federal grants that helped keep them open and serving patients.
More than 150 rural hospitals nationwide closed between 2005 and 2019, the CHQPR report noted. Another 19 shut down in 2020, more than any year in the previous decade.
But only six more closed in 2021 and 2022, because of the financial assistance hospitals received while the pandemic raged.
Now that federal assistance has ended, the financial crisis for rural hospitals looms larger than ever, Miller said.
“The hospitals are going to be facing the situation where they have to spend more than they can take in to be able to pay for care, and they don’t have the reserves to be able to deal with that,” he explained.
The problem owes to the need for hospitals to have a certain number of staffers on duty every hour of every day, while reimbursement is based on the number of patients treated, Miller said.
Urban hospitals serve larger populations and are able to make ends meet due to the constant churn of patients coming in and out. But rural hospitals serving less populated areas are less likely to see enough patients on average to cover costs of care.
“An emergency department in the hospital, it has to have a physician there 24/7 to be able to deal with emergencies, so there’s a certain fixed cost associated with having that physician there around the clock available for patients who need it,” Miller said. “Well, if you have fewer visits because the community is smaller, then there are fewer patients to be able to cover that cost.”
