Becker's Hospital Review

8 CFO / FINANCE Why rural hospital closures hit a record high in 2020 By Ayla Ellison A bout 60 million people — nearly 1 in 5 Americans — live in rural areas and depend on their local hospi- tals for care. Last year, 20 of those hospitals closed, making 2020 a record year for rural hospital closures. Across the U.S., 136 rural hospitals have closed since 2010, according to the Cecil G. Sheps Center for Health Services Research. Of the states that have seen at least one rural hospital close over the past decade, Texas leads with 21 rural hospital closures. A variety of issues have put rural hospitals in a fragile position. Low patient volume and heavy reliance on government payers are among the challenges rural healthcare orga- nizations have faced for years. Newer chal- lenges, such as the financial pressures tied to the COVID-19 pandemic, also threaten rural hospitals' ability to maintain access to health- care services. e Sheps Center began tracking rural hospi- tal closures in 2005. Since then, 180 hospitals in rural communities have shut down, and the number of closures has steadily increased over the past four years. Nearly every state had at least one rural hos- pital at immediate risk of closure before the pandemic, according to a report from the Center for Healthcare Quality and Payment Reform. In 22 states, 25 percent or more of rural hospitals were at immediate risk. e hospitals identified as being at immediate risk of closure had a cumulative negative total margin over the most recent three-year peri- od, and their financial situation has likely de- teriorated because of the pandemic. Before the COVID-19 pandemic, hundreds of rural hospitals "were just trying to keep their doors open," Maggie Elehwany, vice president of government affairs with the National Rural Health Association, told NPR last year. "It was devastating" when they lost an estimated 70 percent of their income due to delayed and deferred care, she said. Several of the 20 rural hospitals that shut down in 2020 faced reimbursement issues and cited dwindling patient volume as a reason they were forced to close. Unfortu- nately, the challenges rural hospitals faced in 2020 will likely persist this year. e COVID-19 pandemic could cause hospi- tals to lose between $53 billion and $122 bil- lion this year, according to a study from con- sulting firm Kaufman Hall commissioned by the American Hospital Association. Rural hospitals could be offered some relief un- der the $1.9 trillion COVID-19 package Pres- ident Joe Biden signed March 11. It provides $8.5 billion for rural healthcare providers. "e bill's $8.5 billion allocation for rural pro- viders will protect and support care for many of the nation's most vulnerable patients, es- pecially those who live in rural, underserved communities," said Federation of American Hospitals President and CEO Chip Kahn. Reps. Tom Reed, R-N.Y., and Terri Sewell, D-Ala., also introduced the Rural Hospital Support Act in March, legislation that would make permanent the Medicare-Dependent Hospital program and the enhanced low-vol- ume Medicare adjustment for small rural hospitals. e legislation is supported by the American Hospital Association. "We applaud you for your leadership in intro- ducing the Rural Hospital Support Act, which will help keep the doors open at rural hospi- tals and allow them to continue serving their local communities during this time of sus- tained financial pressure and historic changes in care delivery," the AHA said in a letter of support for the bill. n At 1 Sutter hospital, commercial insurance rates for same procedure vary sevenfold By Morgan Haefner W ithin the same hospital, the negotiated rate for one procedure — a GI biopsy with an endoscope — can vary by nearly sevenfold, according to an April 1 report from the Health Care Cost Institute. The HCCI researchers studied Sacramento, Calif.-based Sutter Health's published negotiated rate information. The system has published rate information that spans all of its 24 hospitals in Northern California. Three things to know: 1. At Sutter's California Pacific Medical Center-Van Ness in San Francisco, commercial insurance rates for a C-section delivery can vary by $52,688, depending on plan type. 2. HCCI found rate variation was more dramatic across hospitals within the Sutter system. Rates for some four-view knee X-rays at one hospital were more than 11 times as much as at others, and rates for some major lower joint replacements were nearly $60,000 more than others. 3. HCCI researchers said: "While it is unclear if the disclosure of these prices will influence any patients to change where they seek care, that employers can now see the various price levels across different health insurers might prompt more 'smart shop- ping' for their employees' health insurance plan. This could, in turn, put more pressure on insurers to compete for customers through better negotiated rates." n

• Cover