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Rural hospitals at risk for closure

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By Jan White
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To say that rural hospitals face a challenge to remain open is not an overstatement. As of last year, 71 Texas counties had no hospital.

According to a recent report submitted by Kaufman Hall, a healthcare management and consulting firm, Texas hospitals are at serious risk for closure, nearly doubling in total from the last two years. Rural hospitals were at 26% risk of closing, which, the Houston Chronicle reported, “… is a jump of 16% from 2020 and 2021.” The study found that total expenses in 2022 for Texas hospitals are $33.2 billion higher than pre-pandemic levels, “outpacing increases in revenue.” And data from the Cecil G. Sheps Center for Health Service Research shows that Texas led the nation in rural hospital closures between 2005 and 2021.

Charles Owens, with the Georgia State Office of Rural Health, has performed extensive research on why rural hospitals in America struggle to stay afloat. A large number of closures are due to higher poverty levels, poor local health, and greater reliance on Medicare and Medicaid. Combined with the population’s high demand for service, these factors make it hard for rural hospitals to keep their doors open.

“It’s hard to manage a physician practice in an area where the patient population has high percentages of patients with lower paying government coverage.  Those markets are challenging to maintain a financially viable medical practice,” said Owens.

Adding to the dilemma is the number of patients in these communities that have a higher rate of obesity, diabetes, and other chronic conditions that require hospitalization. And the Kaufman Hall study suggests that post-pandemic hospital patients suffer more severe health needs.

While federal funding sources in place during the pandemic have started to expire, workforce shortage and inflation have also contributed to higher expenses for labor, supplies, and drugs compared with pre-pandemic levels. The Kaufman Hall report states, “In the first year of the pandemic, Texas hospitals experienced $1.6 billion in lost income. And while conditions improved in 2021, Texas hospitals have experienced lost income of $3.2 billion to date in 2022, which is approximately a 30% reduction in total income across the state of Texas.” The report also says, “While CARES Act support helped hospitals weather the first two years of the pandemic, the proportion of Texas hospitals with negative operating margins skyrocketed in 2022 to 47.4% or nearly half of all hospitals.”

The difference in growth rates between expenses and revenues has led to significantly depressed margins for Texas hospitals, with average revenues rising 11% but average costs increasing to 20% or greater.

And the labor shortage has had its own domino effect – insufficient staffing means hospitals are unable to discharge patients in a timely manner, increasing their length of stay and incurring additional costs without commensurate reimbursement. Nurses suffering from “compassion fatigue,” brought on by extensive emergency room support, hospice care, or extra shifts due to staffing deficiencies, admit that they have reached burnout and are leaving the medical profession to seek other jobs.

All these factors can combine to create a situational ‘perfect storm’ - which sometimes leaves a hospital with no other choice but to close.

Dr. Kia Parsi, executive director of the Texas A&M Rural and Community Health Institute, says that the effect of those closures could have a crippling impact on local programs like emergency medical services (EMS), where the EMS may become the primary source of healthcare for the area, resulting, again, in overworked employees and the increased strain of transporting patients to distant hospitals. Parsi also noted that mortality and morbidity rates increase by 6% in rural communities where health care is eliminated.

And closures could also affect the community on a more personal level - hospital facilities are sometimes the largest employers in a rural county. The shutdown of local hospitals results in not only lost jobs but also the loss of community leaders, as physicians and hospital administrators often serve in those capacities.

Adequate healthcare in rural communities is crucial but not easy. Support and funding, geographic isolation, transportation, and staffing struggles can be challenging, but a county hospital must maintain its presence in rural areas.

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