One in Five Rural Hospitals Vulnerable to Closure, Study Says

States that did not expand Medicaid tend to have a greater percentage of rural hospitals that are performing poorly, according to a study by a healthcare consulting firm.

More than 450 of the country’s rural hospitals are at risk of closing, according to a new study by a healthcare consulting firm.

Twenty-one percent of America’s 2,160 rural hospitals have financial situations similar to the 113 rural hospitals that have closed since 2010, according to the Chartis Center for Rural Health. In Tennessee and Texas, more than half the rural hospitals are vulnerable to closing, the study found.
“Our model provided us with the opportunity to conduct a more nuanced examination of the path toward closure and better understand the breadth of vulnerability across the nation,” said Michael Topchik, national leader of the Chartis Center, which provides healthcare industry consulting and analysis.

“None of the metrics we track to measure the stability of the rural health safety net are improving, and this research allows us to quantify just how severe the implications could be if the current situation worsens,”

The Chartis Center’s analysis looked at 16 different variables – including factors such as the age of the facility, whether it was in a state that expanded Medicaid, and its operating margin – to determine each hospital’s performance. By ranking the variables, the center compared hospitals’ performance with the performance of hospitals that have already closed and assessed whether they risked closure.
The study found that the year before rural hospitals closed, they underwent a similar set of financial and operational declines. Using that analysis to evaluate the nation’s 2,160 rural hospitals showed there are 453 institutions that are vulnerable to closure.

The report separated those hospitals into two groups. Hospitals facing the gravest threat were categorized “most vulnerable” and the rest were listed as “at risk.” Of the hospitals, 216 were considered “most vulnerable,” while 237 were considered “at risk.”

In the past decade, 120 hospitals have shut their doors. Since just 2016, 56 hospitals have closed, leaving those in the areas they serve in precarious positions as they travel further and further for health care. Tracking by the Cecil G. Sheps Center for Health Services Research at the University of North Carolina found that of the hospitals closed by September 2019, more than a third, or 39, were critical access hospitals.

The Chartis study and an earlier study by the University of North Carolina’s Cecil G. Sheps Center for Health Services Research found that most hospitals at the risk of closure are in states that did not expand Medicaid, as allowed under the Affordable Care Act.

“The closure crisis has affected rural hospitals located in non-Medicaid expansion states much more so than in states that have expanded Medicaid,” the report said. “Our regression model showed that being located in a Medicaid expansion state decreases the likelihood of closure by 62 percent on average.”

Southeastern and Lower Great Plains states are most at risk, the report said. Since 2010, Texas, Tennessee, Oklahoma, Georgia, Alabama and Missouri have seen the highest numbers of hospital closures with a combined loss of nearly half of all the hospital closures across the country. In Texas alone, 20 hospitals have closed in the past decade.

Chartis Center’s analysis found that Tennessee, Texas, Kansas, Missouri, Mississippi and Oklahoma are most at risk of losing the greatest numbers of hospitals. According to the data, 25 of Tennessee’s 48 rural hospitals, or 52 percent, are at risk of closure. In Texas, 77 of that state’s 152 rural hospitals, 51 percent, are vulnerable. In Missouri, 43 percent of rural hospitals are vulnerable to closure, while 42 percent of hospitals in Mississippi are vulnerable.

According to research by Health Services research, hospital closures in rural communities can be devastating for those areas. Their research indicates that hospitals closures reduce the per capita income by $703 or 4 percent, while increasing the unemployment rate by 1.6 percent.

Alison Davis with the Center for Economic Analysis for Rural Health at the University of Kentucky, said hospitals are an economic development entity and many times are one of the largest employers in a rural town, second only to the school district. Because of that, she said, when a hospital closes, the entire economy of the area is affected.

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