When Rural Hospitals Close, More Than Health Care Is Lost

At least 95 have closed their doors since 2010, and roughly a quarter of the ones left are at risk of shuttering.
by | April 2019
A sign outside one of a growing number of rural hospitals that are closing across the country. (AP/Gerry Broome)

If you live in a rural area, there’s a good chance that the nearest hospital is in a precarious financial situation. According to the consulting firm Navigant, at least 21 percent of the nation’s rural hospitals are at high risk of closure; iVantage, a health analytics firm, describes 27 percent of the hospitals as “vulnerable.” Indeed, at least 95 rural hospitals have closed since 2010, according to the University of North Carolina’s Sheps Center for Health Services Research.

The problems are complex and multifaceted. Continued out-migration, low health-care reimbursement rates and increasingly complex health needs in rural America are among the factors contributing to a problem with no easy solutions.

The majority of the closures have occurred in the Southeast, where most of the states that chose not to expand Medicaid eligibility under the Affordable Care Act are clustered. Not only did the states’ decision against expanding Medicaid limit the hospitals’ revenues, but the federal law also imposed additional fiscal burdens, requiring expensive technology upgrades while imposing new payment limits. Of the three states in the region that did expand Medicaid through 2017, Arkansas, Kentucky and Louisiana, only Kentucky has experienced any rural hospital closures since 2010, with three facilities shuttered since its Medicaid expansion, according to UNC’s research.

By contrast, in Texas, which has not expanded Medicaid, 21 rural hospitals have closed since 2013, according to John Henderson, CEO of the Texas Organization of Rural and Community Hospitals. If state lawmakers had chosen to expand the program, it would have made a big difference, Henderson says. “I’m not going to say we would have had zero rural hospital closures, because we still have population problems and issues around federal sequestration,” he says, referring to automatic spending cuts that took effect in 2013. “But when you don’t expand Medicaid, those issues snowball.”

Henderson says he expects to see more hospitals in rural Texas cut services or close this year. “I’ve been traveling around the state, and with my ‘eyeball test’ I’d say 20 to 30 of our 160 rural hospitals are vulnerable,” he says.

Where closures have been reversed or averted, the solutions have largely been community driven, says Alan Morgan, CEO of the National Rural Health Association. In Crockett, Texas, for example, a shuttered hospital reopened in 2018 when two Austin-based doctors decided to invest in it. And a hospital outside Waco evaded closure in 2018 when McLennan County voters approved a dedicated property tax to keep the facility afloat. “That was remarkable because the property tax passed in a county that hates taxes,” Henderson says. “They knew the alternative was an outcome they couldn’t live with.”

It’s questionable, though, whether such community-by-community action is a practical long-term solution. There aren’t many signs of movement in Congress to offer relief, and experts say efforts so far at the state level have left much to be desired. But some of the new governors -- both Democrats and Republicans -- have declared the issue a legislative priority for 2019. In Texas, for example, there’s talk of a higher reimbursement rate for Medicaid patients.

No matter how state policymakers tackle the issue, there is a growing sense of urgency. “When a hospital closes, you see that the community falls down,” Henderson says. “Pharmacies close, grocery stores close, companies choose not to locate to a place where their employees won’t have access to a hospital.”

More is at stake, it seems, than convenient access to the services hospitals provide.