Topics
More on Revenue Cycle Management

What North Carolina's rural hospital struggles reveal about the US

There is a confluence of factors leading to widespread closure of rural hospitals, including demographics, policies and community challenges.

Jeff Lagasse, Associate Editor

The Mission Health system, which operates hospitals in rural North Carolina, is reportedly the subject of acquisition talks by Nashville-based HCA Healthcare in a proposed deal that highlights an ongoing issue with rural hospitals and serves as a microcosm for what's happening nationally.

A confluence of factors is leading to widespread closure of rural hospitals, including demographics, government policies and community challenges. All are on display in North Carolina as HCA considers its acquisition; the large system owns 117 hospitals and 119 surgery centers in the United States and United KIngdom. That, according to a report from the Citizen Times, is raising questions about the fate of rural hospitals outside the Mission Health system.

Since 2010, 85 rural hospitals across the country have closed their doors, according to the Sheps Center for Health Services Research at UNC Chapel Hill. Many more are in distress, and the outlook is disproportionately bleak in the South. More than 8 percent of rural hospitals across the U.S. are at "high risk" of financial distress, said the Sheps Center, but that number jumps to 16.6 percent in the South.

A recent report from Chartis Group and iVantage Health Analytics found that one of the key factors behind these closures was a high rate of uninsured patients, and a payer mix heavy on public insurers with lower claims reimbursement rates. More patients are seeking care outside rural areas, which isn't helping, and many areas see a dearth of employer-sponsored health coverage due to lower employment rates. Many markets are also besieged by a shortage of primary care providers, and tighter payer-negotiated reimbursement rates.

A projected shortage of physicians is affecting all areas of the country but rural hospitals in particular, and demographically, patients in rural markets tend to be more socioeconomically disadvantaged, a problem that is more prevalent in North Carolina and elsewhere in the South.

News about the potential fate of the Mission Health system comes as another rural hospital closed in Dunklin County, Missouri, the 85th in the U.S. since 2010. The county was one of the poorest in the state.

What makes that closure particularly troublesome for patients in the area is that it was home to the only OB-GYN in the region -- a region that has one of the highest premature birth and infant mortality rates in the state. It will now be necessary for pregnant women to drive more than an hour to deliver their babies.

All this comes at a time when the shift from fee-for-service payment models to value-based reimbursement is in full swing, putting pressure on all hospitals to reduce costs -- which is especially problematic for rural hospitals given that their demographic and staffing challenges have a tendency to drive costs up, not down.

Researchers have suggested revisiting a 2015 House bill, the Graves-Loebsack Save Rural Hospital Act, which would create a payment structure whereby 105 percent of "reasonable" costs would be reimbursed; 100 percent of bad debt would be reimbursed; and rural hospitals would be exempt from 2 percent of sequestration of payments. It would also establish the Community Outpatient Hospital Program, a measure aimed at preserving emergency and outpatient care for rural markets, and recoup $5.4 billion in lost Medicare reimbursement among rural hospitals over 10 years.

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com

Show All Comments