GAO: 10 things to know about the spike in rural hospital closures

Emily Rappleye (Twitter | Google+) - Print  | 

A total of 64 rural hospitals closed between 2013 and 2017 — not counting the eight that closed and reopened — which is more than twice as many closures as the previous five-year period, according to a report released Sept. 28 by the U.S. Government Accountability Office.

Here are 10 things to know about the spike in rural hospital closures, based on the report:

1. This has happened before. Between 1985 and 1988, 140 rural hospitals closed, accounting for about 5 percent of the rural hospitals in existence in 1985. These closures are credited to the then-new financial pressures of the Medicare Inpatient Prospective Payment System created in 1983.

2. Comparatively fewer urban hospitals closed. Forty-nine urban hospitals closed between 2013 and 2017, accounting for about 2 percent of all urban hospitals in 2013. The 64 rural closures accounted for 3 percent of rural hospitals in 2013.

3. Most closures — 77 percent — occurred in the South. Texas accounted for 22 percent of the closures between 2013 and 2017, more than the entire Midwest (11 percent) combined.

4. The hospitals that closed were predominantly for-profit. Thirty-six percent of the hospitals that closed between 2013-17 were for-profit, though for-profit hospitals accounted for just 11 percent of rural hospitals in 2013.

5. The hospitals that closed were also predominately designated Medicare Dependent. Of the 64 hospitals that closed between 2013-17, 25 percent were designated Medicare Dependent hospitals, though just 9 percent of rural hospitals were Medicare Dependent in 2013.

6. Financial issues were the root cause of most closures. The GAO notes rural hospital closures typically occurred when hospitals had negative margins and were unable to cover fixed costs.

7. Declining levels of inpatient care often aggravated the hospitals' financial standing. These declines stemmed from increased competition from federally qualified health systems and other larger health systems, as well as a declining rural population overall. The report notes 2010-16 was the first period of rural population decline in American history.

8. Medicare payment reductions were also a major factor in the closures. The GAO notes the average rural hospital in 2016 counted on Medicare for 46 percent of gross patient revenue. Medicare payment reductions across the board contribute to negative margins for rural hospitals, while reductions in Medicare bad debt payments also add financial pressure.

9. Medicaid payments are a boon to rural hospitals. Supporting past research, the GAO found rural hospitals in Medicaid expansion states were far less likely to close than those in states that had not expanded Medicaid as of April 2018.

10. More than half of the closed hospitals converted into another type of healthcare facility, such as urgent care, primary care or emergency services. Forty-seven percent ceased all services.

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