News: A third of all rural U.S. hospitals at risk of closing, report says

According to a report issued by the Center for Healthcare Quality and Payment Reform (CHQPR), hundreds of rural hospitals in the United States are on the verge of financial collapse, MedPage Today reported.

The report examined approximately 700 rural hospitals nationwide—about a third of all rural hospitals in the U.S. According to the report, over 30% of all the rural hospitals in the country are at risk of closing; moreover, over half (roughly 360) of these rural hospitals are at “immediate risk” of doing so due to the severity of their financial woes.

According to the report, the primary reason most rural hospitals are struggling so much is that “private insurance plans are paying them less than what it costs to deliver services to patients.” While many “at-risk hospitals” are “losing money on uninsured patients and Medicaid patients,” the losses occurring from patients with private insurance are the “biggest cause of overall losses.”

The report noted that this development is further exacerbated by insufficient revenue, the continued delivery of patient services, and low financial reserves. However, it also noted that proponents seeking to unburden such hospitals via shutting down inpatient services, changing the hospital into a “rural emergency hospital,” and thereby receiving extra funding from CMS are mistaken.

“Most ‘solutions’ for rural hospitals have focused on increasing Medicare or Medicaid payments or expanding Medicaid eligibility due to a mistaken belief that most rural patients are insured by Medicare and Medicaid or are uninsured,” the report said.

“In reality,” they continued, “about half of the services at the average rural hospital are delivered to patients with private insurance (both employer-sponsored insurance and Medicare Advantage plans). In most cases, the amounts these private plans pay, not Medicare or Medicaid payments, determine whether a rural hospital loses money.”

To potentially ease some of the financial burden, the CHQPR report recommends the implementation of “Standby Capacity Payments” in rural hospitals—an action which would “support the fixed costs of essential services at the hospital, and the Service-Based Fees would cover the variable costs of those services.”

Editor’s note: To read the MedPage Today, coverage, click here. To read the CHQPR analysis, click here.