In a troubling development that has become increasingly common, two Hospital Sisters Health System (HSHS) hospitals and 19 Prevea Health clinics recently announced they will close in April, leaving a gaping care gap in northwest Wisconsin and nearly 1,400 unemployed people. TO new report from consulting firm Chartis indicates that this scenario is becoming increasingly common, with 50 percent of the country’s rural hospitals operating at a loss and 418 vulnerable to closure.
The latest research from the Chartis Center for Rural Health points to what it calls a striking new phase of this crisis as rural hospitals fall further into the red and “deserts of care” widen across rural communities. . The report also notes that increasing Medicare Advantage penetration could further impact rural hospital revenues.
A record 28 rural communities lost access to hospital care last year as a result of rural hospitals closing or converting to a model that excludes hospital care.
“America’s rural hospitals have been battling instability factors for more than a decade, but this latest research suggests this crisis has rapidly accelerated to levels never seen before,” said Michael Topchik, national leader of the Chartis Center. for Rural Health, in a statement. . “Knowing that the percentage of rural hospitals in the red has changed by 7 percent and now includes half of all rural hospitals is surprising and should serve as an urgent call to action for everyone investing in rural healthcare.” .
“We are seeing a rapidly deteriorating environment for rural hospitals,” Alan Morgan, CEO of the National Rural Health Association, said in a statement. “The time has come to sound the alarm. “Rural communities should know that their hospitals face serious obstacles and Congress must act to maintain access to local health care.”
The Chartis report breaks down the crisis by region of the country. States with the highest percentage of rural hospitals operating at a loss include Kansas (89 percent in the red), New York and Wyoming (83 percent each), Vermont (75 percent) and Alabama (74 percent). In Kansas, which is home to 99 rural hospitals, the average operating margin is -10 percent. With the exception of Delaware (home to only two rural hospitals), Utah is the only state where the percentage of rural hospitals in the red is less than 20 percent.
With approximately 20 percent of America’s rural hospitals vulnerable to closure, the states with the highest percentage of vulnerable rural hospitals are Florida (43 percent), Nebraska (41 percent), Tennessee (41 percent), Carolina of the North (40 percent), Kansas (38 percent). percent) and Utah (38 percent).
The Impact of Medicaid Expansion, Medicare Advantage
The report notes that facilities in states that have not expanded Medicaid have consistently performed worse financially than their expanding state counterparts. This year’s analysis not only shows a continuation of that trend but a similar jump in the percentage of rural hospitals operating in the red.
In the remaining 10 non-expansion states (Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin and Wyoming), the percentage of facilities with a negative operating margin increased year over year from 51 percent to 55 percent. These states are home to more than 600 rural hospitals in total. Several of these states are among the hardest hit by hospital closures and loss of access to care.
Chartis analysis indicates that between 2019 and 2023, Medicare Advantage enrollment in rural communities increased 48 percent. Medicare Advantage net reimbursement to critical access hospitals is typically lower for similar services than traditional Medicare because Medicare Advantage does not follow cost-based reimbursement.
Medicare Advantage also may not cover all the services that traditional Medicare offers, including swing beds, which provide skilled nursing care to patients and are often a strong source of revenue stability for rural hospitals.
The report also says that rural providers may not be equipped to efficiently navigate the administrative payment requirements introduced by Medicare Advantage, such as prior authorizations, which can lead to increased denials.
“This study confirms that Medicare-eligible patients in rural communities are increasingly choosing Medicare Advantage plans. “This changing mix of payers has emerged as a major pressure point for rural hospitals that have come to rely on predictable reimbursement rates associated with traditional Medicare,” Topchik added.
