More than 600 rural hospitals across the U.S. are at risk of closure, and most of the proposed solutions aren't helping, according to a report from the Center for Healthcare Quality & Payment Reform.
Rural hospitals face increased labor and supply costs while losing money on patient services. Urban and large rural hospitals have seen losses from 2019 to 2022, but still have positive margins on patient services. By contrast, small rural hospitals had around -5 percent margin on patient services prior to the pandemic, which decreased to -7 percent margin last year.
Small rural hospitals received grants during the pandemic to stay afloat, but the funding has now ended and these hospitals face even bigger losses. Regional medical centers and health systems are stepping in to support small rural hospitals in some areas, while others are depending on the state and federal government for funding through the Rural Emergency Hospital program and Medicaid expansion. Those programs offer limited relief, as Medicaid is a small part of the issue for rural hospitals and the REH program requires them to forgo inpatient services to receive funding.
Another popular strategy to save rural healthcare is the "golden budget" solution, which reduces Medicare and Medicaid payments for rural hospitals but gives them more autonomy on how to use the funds. The CHQPR is also critical of this concept, pointing to Maryland's global budget program, which resulted in the smallest rural hospital in the state closing.
Earlier this year, the Center for Medicare and Medicaid Innovation supporting these efforts was terminated "after it became clear that it would harm small rural hospitals rather than help them."
"Hospitals in communities that are experiencing significant population losses or that deliver unnecessary services could benefit from a global budget program, at least in the short run, because revenues would no longer decrease when the volume of services decreases," according to a CHQPR report. "However, hospitals that experience higher costs or higher volumes of services due to circumstances beyond their control would likely be harmed, since their revenues would no longer increase to help cover the additional costs."
The report also noted other countries have modified or exited global hospital budgets after long wait times threatened access to care.