Rural hospitals are struggling. New Research from the Chartis Center for Rural Health, in conjunction with iVantage Health Analytics, confirms that rural healthcare providers serve populations which are not only socioeconomically disadvantaged, but suffer from numerous health disparities and poorer outcomes than those in urban settings -- making it difficult for them to operate in the black.
Seniors and veterans in particular are driving up demand. U.S. Census Bureau statistics show that adults in rural areas skew older, with a median age of 51 as compared to 45 in non-rural areas. That means higher hospitalization rates and lengths of stay, thereby increasing demand, and the report found most rural providers serve a greater population of patients older than 65 than two-thirds of all acute care hospitals.
As for veterans, a disproportionate number of them live in rural counties and may have to travel considerable distances to reach Veterans Health Administration facilities, which means rural providers are often called upon to fill an access void.
Especially challenging is that rural communities tend to have a higher burden of disease, including preventative diseases such as diabetes. Yet the supply of physicians is lower in these areas. This trend, according to the research, may be contributing to higher premature death rates and child mortality rates in rural communities.
The opioid epidemic also poses an increasing challenge, particularly since the Centers for Disease Control and Prevention pegged the death rate from opioid overdoses at about 45 percent higher in rural settings. These areas are typically isolated from treatment facilities and addiction counseling, and with the prices of antidote drugs like Naloxone skyrocketing, rural providers often leave more expensive therapies to emergency medical services. And there's little opportunity to recoup that cost, since many rural communities lack commercial insurance or even Medicaid coverage.
Since 2010, 80 rural hospitals have closed, according to the research, and many more are struggling to stay open. The implication is that the rural health safety net us unraveling; 41 percent of rural hospitals are operating at a negative margin, the data showed. Numerous factors impact these operating margins, including payer mix and the percentage of uninsured; allowable cost-based Medicare reimbursement; the employment rate and the related availability of employer-sponsored commercial insurance; payer-negotiated rates; the availability of primary care; and population health and health disparities.
The healthcare industry's transition from volume to value has also affected hospital margins, renewing a focus on cost management. Jamie Orlikoff, a health governance expert, recommends the industry work to take 5-6 percent of costs out of the system and reach a five-year target of 25-30 percent cost reduction, according to the report.
Increasingly, employers are partnering with payers to form narrow networks of preferred providers. Those providers are preferred by the market because they offer good care at a low cost. Rural hospitals, the report said, "should strive for relevance for gain in-network status by defending and reducing their costs while continuously improving the quality of care in the face of these and other market forces."