Rural hospitals can have a 'false sense of reality' about disappearing pandemic funds

Rural hospitals across the United States are facing multiple challenges both old and new and especially now that any pandemic-related funds they have received are drying up, according to a March 7 Kaiser Health News report.

Since 2010, 145 rural hospitals have closed, but COVID-19 relief measures slowed that trend, the report said. Only 10 such hospitals closed in 2021 and 2022 combined after a record 19 in 2020.

But now that pandemic funds are drying up, challenges facing rural hospitals before the pandemic are raising their ugly heads and many are back on shaky ground. Pressures brought on by the pandemic such as inflation and higher wages are also adding to the mix negatively.

While the percentage of rural hospitals operating in the red was approximately 33 percent 10 years ago, that figure is now approximately 43 percent. Such hospitals should be able to operate on patient revenue alone but often find themselves having to dip into federal funds to keep the lights on and the doors open, Michael Topchik, head of the Chartis Center for Rural Health, told Kaiser Health News.

Rural hospitals in states that expanded Medicaid under the Affordable Care Act have an average 2.6 percent margin, while those in non-expansion states have a 0.6 percent average.

But all hospitals are facing mounting challenges, and some have a "false sense of reality" after the infusion of relief payments, said Jeffrey Johnson, a partner with consulting firm Wipfli who told Kaiser Health News he has repeatedly warned hospital boards not to overestimate their financial position emerging from the pandemic.

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