30 rural hospitals in 2 states at risk of closing

Rural hospitals in Kansas and Kentucky, like in many other states across the nation, are facing financial struggles, and dozens may close as a result.

There are a number of factors taking a toll on these hospitals' finances, including changes in the way hospitals are paid for their services and declining populations in many rural areas.

Many of the rural hospitals in Kansas have the critical access hospital designation. In fact, Kansas has more critical access hospitals than any other state, according to an HPPR report.

Under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, critical access hospitals received 101 percent of reasonable costs. However, sequestration — a 2 percent across-the-board cut in Medicare provider payments — took effect in April 2013. Therefore, critical access hospitals are receiving 99 percent of their allowable costs.

Those payment cuts are leading to financial troubles for some rural hospitals, according to Jodi Schmidt, president of the National Rural Health Association.

"There are some basic things you would expect to have in a hospital, like television sets and telephones, that Medicare does not consider allowable costs," Ms. Schmidt told HPPR. "And then there are a number of physician costs outside of the emergency room and other sorts of operational overhead expense that the government doesn't consider allowable."

In Kansas, where Medicaid has not been expanded, rural hospitals are seeing a growing number of uninsured patients, and hospitals often recoup a very small percentage of what it spent on medical care for those patients.

Ms. Schmidt told HPPR there are 15 rural hospitals in Kansas that are facing some of the same financial issues as 50 other rural hospitals that have already closed across the country. "That means as many as 15 Kansas hospitals could be struggling to keep their doors open," the report states.

Rural hospitals in Kentucky are facing many of the same challenges as those in Kansas. An audit released in March of 66 rural hospitals in Kentucky revealed 68 percent of them are below the national average in assessed financial strength. Fifteen of the hospitals examined were in danger of closing due to poor financial health.

Although officials in Kentucky Gov. Steve Beshear's administration argued the audit failed to paint a complete picture since 14 rural hospitals in the state did not participate, Kentucky Hospital Association CEO Michael Rust did not accept that argument. Mr. Rust said even if the 14 additional hospitals had been included the financial picture wouldn't have been substantially different.

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