Across the U.S., many aging rural hospitals are facing a significant hurdle: They aren't able to finance capital and infrastructure improvement projects that would enable them to expand their services and boost revenue.
The problem stems from a number of overlapping issues, including low reimbursement from insurers, rising labor and supply costs, and high interest rates for financing options, according to a Jan. 11 report from KFF Health News and Fortune Well.
Lincoln Community Hospital in Hugo, Colo., for example, has a surgeon who could perform hip replacements and shoulder surgeries. Adding the procedures would be a way to boost the hospital's revenue and save the community's patients a long drive to Denver for the orthopedic surgeries, but the 64-year-old hospital doesn't have the funds to expand its operating rooms.
"Most of us are operating at very low margins, if any margin at all," Kevin Stansbury, the hospital's CEO, told the publications. "So, we're struggling to find the money."
Identifying firm trends on the age of hospitals is a challenge since hospitals may upgrade or expand different parts of their facility over time, according to the report. But one American Hospital Association analysis from 2017 found the average age of U.S. hospitals rose from 8.6 years in 1994 to 11.5 years in 2015, which is now likely higher since many capital improvement projects were delayed during the pandemic.
Aging infrastructure is a growing concern particularly for rural hospitals, since most of the facilities today were opened through funding from the Hill-Burton Act, passed by Congress in 1946. The program was then included in the Public Health Service Act, and by 1997, the construction of nearly 7,000 hospitals and clinics had been funded by the program. Many of those are now in need of upgrades.
With rural hospital closures on the rise (37 have closed since 2020), some hospital leaders and other stakeholders are concerned that facilities might invest in new projects only to end up closing anyway.
In the meantime, lawmakers have introduced bills to support rural hospitals in funding development projects. Rep. Yadira Caraveo, a Colorado Democrat, introduced bipartisan legislation — the Rural Health Care Facilities Revitalization Act — which would grant funding for facility upgrades in the U.S. Department of Agriculture. The bill is meant to prevent rural hospitals from having to go through private lenders with higher interest rates and would allow hospitals that already have loans to refinance them at lower rates.