Speak Your Piece: A Rural Hospital Crisis

The federal government needs to overhaul the rules that govern small, rural hospitals. Otherwise, we’ll see a drastic number of closures and a loss of critical medical services for small communities. Who is going to step up?


North Carolina Health News

A sign supporting a small, rural hospital on the side of the road near Belhaven, North Carolina, a small coastal town.

The number of patients admitted to small, rural hospitals is dropping rapidly, creating big changes in the economics of rural healthcare.

From 1996 to 2012, the average number of acutely ill inpatients at “critical access hospitals” fell by half, from an average of 8.7 to 4.35 per hospital per day.

If the current rate of decline continues, most of the inpatient business at these hospitals will be gone in the next decade.

Inpatient care accounts for a third or less of the revenue of critical access hospitals. But it’s a vital stream of money for institutions that operate in the black by only 1% of their budgets, on average.

Why are patient admissions declining, and how should we respond?

Critical Access Hospitals

A critical access hospital, or “CAH,” is a rural hospital with no more than 25 beds that meets certain criteria for distance from other hospitals or has been declared critically needed by its state’s governor.  Unlike most hospitals, a critical access hospital is paid whatever it costs to care for its Medicare hospitalized patients and, in many states, its Medicaid patients.   

The federal government developed the designation of critical access hospitals during the late 1990s, in part to address a spate of rural hospital closures. Now, with the drop in inpatients (plus some changes from Obamacare and the failure of some states to expand Medicaid), the problem of hospital closures is back in the news.

Where Have All the Patients Gone?

The inpatients who previously might have been treated at a critical access hospital are likely going to larger hospitals, as opposed to getting treatment at some other kind of community hospital.

Part of the change comes from an important “age cohort” effect. Twenty years ago, researchers found that people older than 65 thought their small, rural hospital was good or excellent.  But back then, people under 45 were less likely to think so. 

Now most of those elderly, local-hospital supporters are dead. And the group that didn’t think as highly of rural hospitals back then are probably seeking treatment elsewhere today. (The study by Amy Hagopian, Peter House and colleagues working in the University of Washington Rural Hospital Project from 1986 through 1994 surveyed 33,000 households in 56 rural communities concerning perceptions of 46 rural hospitals. It was published in 2000 in the Journal of Rural Health.)

There are other factors.  Hospital care has shifted toward higher technology that is available only in larger facilities. 

Hospital use overall has declined, to the detriment of smaller hospitals.

There have been unfavorable articles in major medical journals that reflect ignorance or bias throughout the research and publication process, as well as a current blitz of federal regulatory issues. 

But the long-term trend is bigger than any one of these factors. The reasons for decline in acute inpatient services are structural and ongoing. No single agency can change these patterns. They relate to the way patients seek care and the way doctors practice. The decline predates and overrides any particular regulation, legislation or administration.

Why Does It Matter?

When rural hospitals close, it affects more than just the patients who would have received inpatient care.

One issue is access to round-the-clock urgent and emergency care.  In a rural community that means an emergency room.  The way things stand now, under Medicare rules, you can’t have an emergency room without inpatient beds.  And Medicare rules determine how rural hospitals operate. That’s because older people who qualify for Medicare make up most of the patients for rural hospitals, and a lot of other payment programs follow Medicare rules.  Medicare won’t pay bills for emergency room services unless a facility has inpatients.