Rural Health Policy Project

Expanding Medicaid Would Help Keep Rural Hospitals Open in 14 Non-Expansion States

I’ve written before about how America’s rural hospitals are in crisis – and the 14 states that still are refusing to expand Medicaid are contributing to financial woes of these institutions. The coronavirus pandemic has pushed these rural providers to the brink. There is stress throughout the health system with even major hospitals in urban settings feeling financial pain – and many small family practices and pediatricians on the verge of going out of business. Rural hospitals have a special role as the health problems caused by the pandemic expand across the country and begin to affect more rural areas and states.

Our friends at the University of North Carolina’s Rural Health Research Program track rural hospital closures. Already they count ten hospitals closed in 2020 – a rate that puts closures across the country on track to easily exceed the 18 rural hospitals closures in 2019.

While some money for rural hospitals may be available through the Coronavirus Aid, Relief and Economic Security (CARES) Act, many rural hospital leaders fear this isn’t enough to make up for the financial pressures of the pandemic. As was recently explained in an excellent Health Affairs overview by Adrian Diaz, Karan Chhabra, and John Scott, rural hospitals may need more targeted financial help than has already been provided, especially as the effects of the pandemic begin to be felt more broadly. The authors note that rural hospitals in states that have not expanded Medicaid have a median operating margin of -0.3 percent compared to +0.8 percent for the same type of hospitals in expansion states.

Across the country there are increasing stories of rural hospitals under stress:

Rural hospital CEOs are sounding the alarm in Missouri:

“The most vulnerable are independent hospitals without the backing of larger health systems, plus those in poor, remote areas, and those in states — like Missouri — that have not expanded Medicaid, Tobler said.”

And in Texas, where Representative Lloyd Doggett noted, “So many of our hospitals that were under great threat before this pandemic ever happened, now they [rural hospitals] have declining revenues and increased needs.” One of these hospitals is in rural Clifton where CEO Adam Willmann explains the agonizing choices facing his institution and many others:

“You go out and spend $20,000 on N95 masks.  Or you keep that $20,000 so you can make payroll in two to three weeks.”

Because of the large number of people and institutions affected, the rural hospital situation in Texas continues to receive national media attention from outlets like the PBS News Hour and this story on 60 Minutes that opens with the Texas Commissioner of Rural Health explaining one Texas rural hospital already filed for bankruptcy last week.

Over in Colorado, rural hospitals are seen as “disproportionately vulnerable,” and hospital officials are “worried about their ability to keep their doors open.”

In Washington State, one rural hospital has already furloughed 18 percent of its workforce and is not certain it can survive the financial stress caused by the pandemic.

Like many rural hospitals around the country, two rural hospitals in Maine report a 50% reduction in patients during the pandemic because of cancellation of elective procedures, putting them under more financial stress.

The same is true in rural Wisconsin where the more than forty rural hospitals in the Rural Wisconsin Health Cooperative worry that the financial pressures caused by the pandemic will finally result in closures.

In Pennsylvania two small hospitals have closed since December and analysts estimate at least 10 more Pennsylvania hospitals are in danger of closing – and this all before the pandemic. Smaller hospitals are seen at much higher risk.

And in Nebraska at one small county hospital revenues are down 75% and excess stress is seen on all hospital finances as the pandemic worsens.

Rural hospitals are a critical link in the health care chain. By expanding Medicaid, the 14 non-expansion states can not only help millions of their residents in need of affordable health care but also increase the chances that rural hospitals can stay open. More targeted pandemic relief to rural health providers serving people on Medicaid – a category that includes rural hospitals – can help with the current huge stress on the health system. And finally, a commitment that no American – whether they live in a rural area or an urban center – be forced to go without decent health coverage would mean all patients in rural hospitals can be seen and pay their bills thus helping keep both people and hospitals healthy and secure.

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