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A girl holds a sign at a rally held Sept. 16, 2016, in Raleigh, North Carolina, imploring state lawmakers to save a hospital in the town of Belhaven. (AP file photo: The News & Observer)
A girl holds a sign at a rally held Sept. 16, 2016, in Raleigh, North Carolina, imploring state lawmakers to save a hospital in the town of Belhaven. (AP file photo: The News & Observer)

Rural hospitals at risk amid policy debate

By Margie Hyslop
BridgeTower Media

Stalled efforts to repeal and replace the Affordable Care Act have given rural hospitals a reprieve, health care experts say, but those institutions continue to face financial and operating challenges that have pushed many to close in recent years.

In the seven years since the ACA went into effect and brought health insurance to millions more uninsured U.S. residents, 82 rural hospitals shut down inpatient services, leaving residents to travel much farther to access care.

Most of those closures occurred in states that chose not to expand Medicaid under the law, commonly known as Obamacare.

In states that expanded Medicaid to cover more low-income residents, hospitals have been paid for services they otherwise would have had to provide free, relieving some, but not all, of the pressure on their bottom lines.

For hospitals in states that expanded Medicaid coverage, the good news is that the Medicaid program is stable, and “that’s a big deal,” said Jack Hoadley, a health policy analyst, political scientist and researcher at Georgetown University’s Health Policy Institute.

Most of the Republican replacement proposals for Obamacare envisioned reduced or capped Medicaid spending at the federal level, which most analysts say would hit rural hospitals hard.

However, “we’re not breathing a sigh of relief — we’re very concerned that there still remains an appetite to do something with the Affordable Care Act,” said Michael Topchik, senior vice president of iVantage Health Analytics and director of the Chartis Center for Rural Health.

An ongoing struggle

Before and after the ACA, many rural hospitals struggled to bring in enough revenue to cover their expenses.  And they have ongoing difficulty retaining physicians and staff with a shrinking, often sicker and poorer, patient base.

“A lot of rural funding programs are up for reauthorization and many rural hospitals are only surviving because they have these programs,” which at the beginning of the federal budget year have yet to be renewed, said Priya Bathija, senior associate director of policy development for the American Hospital Association.

The ACA helped hospitals in some ways but fell short in others, according to the National Rural Health Association.

By not generating competitive markets or pools big enough to spread risk, the ACA left rural residents with little choice but to pay sharply higher insurance premiums than their urban and suburban counterparts. That left rural hospitals stuck with the medical expenses their patients could not pay.

Even though Obamacare has survived — at least for now — the uncertainty of what comes next has rural hospital executives worried.

Will the Trump administration discontinue federal cost-sharing payments? Will the administration’s cuts to marketing and outreach programs designed to encourage patients to sign up for coverage on the health insurance exchanges result in fewer insured Americans?

Fewer insured residents leaves hospitals with fewer patients. And some of those that do seek care wouldn’t have coverage.

“The biggest problem is the uncertainty,” said Bathija.

That would not be good news for the nation’s roughly 2,360 rural hospitals.

The worst cases

It could be particularly bad for the 44 percent to 45 percent of rural hospitals that University of North Carolina at Chapel Hill professor George Pink said show losses or simply break even each year.

Many continue to lose money year after year, and “that trajectory indicates that they will continue to have financial struggles,” said Pink, deputy director of the North Carolina Rural Health Research and Policy Analysis Center.

Factors such as aging buildings, outdated technology and infrastructure, sagging local economies, dwindling populations and limited access to capital could result in more than a quarter of rural hospitals closing in coming years, consultants and analysts say.

Because the local hospital is often the largest employer in a rural community, its closure has a “huge multiplier effect,” Pink said. Businesses often will not open new offices, plants or stores because communities without a hospital are perceived to be in decline. Schools have trouble recruiting teachers, who don’t want to live where no hospital is nearby to serve them and their families, Pink said.

Those states that did not expand Medicaid might want to reconsider that decision, because expanded Medicaid coverage “could be the difference in keeping [their] hospital alive for some time to come,” Hoadley said.

Each of the major Republican proposals that failed in September “would have decimated rural hospitals,” Topchik said.

But “the flip-side is there’s enormous consensus on both sides of the aisle that rural [health care] matters,” particularly in the wake of last year’s election. “There’s some consensus that we need to fix this once and for all, and not get on a one- and two-year track,” Topchik said.

Meanwhile, more rural hospitals may choose to downsize, give up inpatient services or partner with larger hospitals or health care systems to survive.

 

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