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A quarter of rural hospitals at ’high risk’ of closure, COVID-19 likely to make it worse

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April 9, 2020

By Jack O'Brien, HealthLeaders Media

One quarter of rural hospitals are at high risk of closing due to financial challenges, according to a Guidehouse analysis released Wednesday morning.

A major factor hampering the financial situation for rural providers is the migration of patients to care options outside of the community, with over 75% of patients bypassing local hospitals to receive care elsewhere. These levels are much higher compared to the outmigration patterns of suburban and urban patients.

More than 350 rural hospitals, accounting for $8.3 billion in total patient revenue, are at the greatest financial risk of closure, according to Guidehouse. The five states most likely to be impacted by hospital closures include Tennessee, Oklahoma, Mississippi, Alabama, and Kansas, according to the analysis.

Guidehouse conducted its research prior to the outbreak of coronavirus disease 2019 (COVID-19) but stated in the report that the pandemic is "likely to worsen the overall situation."

Dave Mosley, partner at Guidehouse, said in a statement that hospitals often serve a key economic purpose beyond the clinical services offered to rural communities, one which was in jeopardy before the domestic spread of the coronavirus.

"It was already troubling that the economic outlook for rural hospitals deteriorated during the longest period of uninterrupted economic growth our country has ever experienced," Mosley said. "A major crisis like the COVID-19 pandemic or any significant economic downturn is likely to make the situation even more dire."

The analysis offered strategic advice for rural provider executives, including a focus on scale through partnerships with regional health systems or academic medical centers, and working with community leaders to "promote and sustain" hospital operations and the outflow of patients to distant care sites.

The Guidehouse analysis stated that though there is not one single solution to remedy the complex financial challenges facing rural providers, federal lawmakers have legislative options to lessen the burden.

Namely, the analysis cited the Rural Emergency Acute Care Hospital (REACH) Act, a bipartisan bill introduced in 2017, that would allow critical access hospitals (CAH) to align the care delivery model to the needs of the community without the "financial disincentive of losing cost-plus reimbursement." Additionally, the bill would allow CAHs to shed excess inpatient beds and shift focus to outpatient care options.

Guidehouse's analysis was released two days after the Urban Institute published a blog post that stated that the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, which included a $117 billion stimulus package for hospitals, might not be enough for rural providers.

Diane Arnos and Fredric Blavin, co-authors of the post, stated that while urban hospitals have been hardest hit by the pandemic, rural hospitals face specific challenges related to the virus in their respective communities as well.

"From serving higher-risk populations to struggling with limited funding, rural hospitals face serious challenges that may require additional federal action to address," Arnos and Blavin wrote. "To improve access to and quality of care for rural communities, state and federal policymakers should consider supplying medical equipment and other assistance as the pandemic spreads to these areas."




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