This op-ed by Tom Dean appeared on Colorado Newsline on January 19,2024.
Over the last 15 years, approximately 150 rural hospitals have closed nationwide. What does it mean? Are these facilities obsolete, no longer needed? Maybe in a few places, but in the vast majority of communities they provide critically important services.
In most rural communities, the hospital has multiple roles and is the cornerstone for health services. Typically they serve as the base for local EMS/ambulance services and provide crucial first-contact care in medical and trauma emergencies. Besides delivering a range of out-patient services, they care for inpatients who do not require the high-tech interventions of the regional referral centers. Here, they often do a better job than overstressed referral centers. In essence, they are the central component of a rural safety net.
Closures always involve unique local factors. However, the most consistent — and usually the dominant — dilemma is that the costs of continued operation have outpaced the income available to cover them. In the final analysis, decisions which will directly and negatively impact the health and safety of residents are being made based on economic/financial justifications, too often without due regard for adverse health impacts.
How did we get to such a situation? The fundamental fact is that in a market-based economy, entities that generate income enough to cover expenses survive and those who do not fail. Hospitals do have other possible sources of revenue such as local taxes, assistance from larger health systems, etc. These sources, however, are limited and frequently not enough.
Perhaps all this should not be surprising. These facilities have been serving smaller and smaller numbers during a time when the services they must provide have become increasingly complex, technology-dependent and costly. To be prepared for the broad range of services they must provide, these facilities need to have personnel and equipment in place which will not be used often enough to generate the income needed to cover costs. Particularly in the more remote rural areas, facilities don’t have the option of maintaining only those services that pay for themselves.
Another problem is that relative reimbursement for different types of care are notoriously uneven. Activities like complex imaging and complicated surgical procedures are reimbursed more favorably than are such things as basic obstetrical care, emergency and trauma services or low-tech inpatient care — the core functions of rural hospitals.
Several federal programs have been developed attempting to stabilize rural hospitals. The Critical Access Hospital program restructured Medicare payments to be more favorable to hospitals that are the only acute care providers in their areas. This was a great benefit to many rural facilities but was not enough for all.
A recent federal development, the Rural Emergency Hospital program, offers new payments to facilities that agree to cease providing inpatient care and provide only emergency services. Some facilities have accepted this, but many have questioned the logic of the arrangement given that there is often a real need for local inpatient services. Furthermore, the staffing and technology requirements for a credible emergency room are not demonstrably less than those required for inpatient services, meaning there would be questionable cost saving.
There are other models for delivering important services to sparsely populated areas. Many years ago the Rural Electrification Administration (REA) made available at affordable prices an important service — electric power. This would not have been feasible if the recipients were charged the full cost of installation. The situation with health care is clearly different but in some respects not so much. It is a vital service in which the cost per item increases as the volume of utilization decreases.
A recent and quite worrisome development is the emergence of private equity in the ownership and management of health care facilities. The single motivating factor for these organizations is profit, preferably quick profit. A full discussion of this trend is beyond the scope of this article. Suffice it to say, however, the preservation of a rural safety net is not likely to be a high priority.
Providing health care access for folks in rural areas, in the “bread basket” of our nation, has always been a challenge. Technology developments, especially telehealth services, have clearly been beneficial. At the same time, small rural hospitals still struggle. They are the cornerstone for that access. They deserve all the creative thinking we can mobilize to find better approaches to protect them.