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Costs of Care (old)

As Rural Hospitals Die, Local Communities Suffer

An ambulance for sale.
Paul Long/CC/Flickr
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After Al Szameit, 83, survived quadruple bypass heart surgery, he and his wife moved to a senior living complex in Gilmer, Texas, to be close to the local hospital. But five months later, that hospital, East Texas Medical Center- Gilmer, is closing. Gilmer is the third small town the couple has moved to where the hospital closed, a story in the Tyler Morning Telegraph reports.

Rural hospitals in the U.S. have recently been closing at an accelerated rate. Forty-eight rural hospitals closed between January 2010 and January 2014, according to the North Carolina Rural Health Research Program at UNC-Chapel Hill. Thirty closed between 2013 and 2014 alone. 

Losing access to in-patient care is a hardship for rural residents but the effects of hospital closures in rural communities go well beyond that, says Dr. Daniel Derksen, director of the Center for Rural Health at the University of Arizona. Sound Medicine spoke with Dr. Derksen to learn why so many hospitals in rural communities are closing, and what can be done to sustain those that remain.

Sound Medicine: What are some of the factors that threaten a small hospital's survival prospects compared to a larger counterpart in a big city? 

Daniel Derksen: First of all, rural hospitals are really a central strand in our nation's healthcare safety net. These communities depend on this health infrastructure to provide health services and ready access to care for individuals that live in those communities. They're really the foundation for community and create jobs and catalyze economic development, as well as provide access to high-quality care. 

But right now our health system in the country is undergoing dramatic transformation. There are a lot of opportunities for rural hospitals, as well as challenges. I’d say one of the challenges is a shortage of healthcare providers in small towns, at the same time that many more people are being covered by the provisions of the Affordable Care Act such as expanded Medicaid, and by the healthcare marketplaces,

And we’re seeing the way that hospitals are being paid is changing very quickly. In the past it's been dominated by receiving a payment or a fee every time a service is provided. The system is rapidly changing to payment for health outcomes. There's an expectation now of not only performing a service, but a high quality outcome. 

SM: But the rate of hospital closures really seems to have accelerated in the past two years. What's behind the closures?

DD: There are several factors that are contributing to closures of hospitals in rural areas. One of them is that as the payment models change, the hospital systems that do well are those that are integrated and collaborating with other health systems. You can't duplicate services that are readily available in a region. There's an economy of scale of providing certain services in that particular community and farming out some of those services or providing them with new technology, such as telehealth. 

Those hospitals that are doing better are adapting to the changes in the way healthcare's being financed. Those that haven't adapted as quickly or are not part of a larger system are very vulnerable to the month-to-month changes in the way things are paid for, or the quality outcomes that are expected by an insurer or a public payer like Medicare or Medicaid.

SM: We knew these changes were coming. Is it just that they couldn't adapt quickly enough? Or is the system just set up against rural hospitals? 

DD: Rural hospitals have to adapt to changes at the city, state and national level. Over the past two or three years those changes have been coming very quickly. Often the individuals responsible for the administration of a hospital—the CEO, the Chief Nursing Officer, the Chief Information Officer—have to be aware of the changes not only at the federal level in the way Medicare might pay them, but also at the local level, in how a particular insurer pays them and expects them to report back on some of the quality outcomes that they're demanding now. 

Some have adapted very quickly and understand the changes, and others have really struggled to make those rapid changes, because there are just a very small number of individuals that are responsible for administering the operations of a particular hospital. 

SM: When a small town hospital shuts down, what are some of the ways it can affect residents' health?

DD: The most serious concern is eliminating that ready access to healthcare. Critical access hospitals in smaller communities are hospitals with 25 beds or less, more than 35 miles from other hospital facilities. They're required to provide 24/7 emergency services. So if one of those safety-net hospitals shuts down, often people have to drive very long distances. 

But the closure can also be devastating to the economics of the community. Once you lose the rural hospital it affects all the other services related to health in that community, such as the pharmacy, the private clinic, or perhaps even the nursing home or other types of health services. Once you lose that anchoring point of a rural hospital, the other services erode as well. 

SM: Can any technologies help ease the pain in small towns that lose their hospitals? Better equipped ambulances, for example? Or seeing a specialist via a video link? 

DD: One thing that's evolving very quickly is remote access—telehealth or telemedicine services. At many rural hospitals, for example, if they do an x-ray in the emergency room and it's after hours, a radiologist can read that image and report back very quickly through telehealth linkage. For specialists like dermatologists or rheumatologists or cardiologists, where there might not be enough business for them to exist in a small community-  many of those services can be delivered without the physical presence of a doctor at that specific facility. 

SM: What can be done to help support rural hospitals?

DD: There are a number of tools available to communities to help support their rural hospital. Sometimes it's a small gross receipts tax, like a one percent tax to help a hospital get through the ups and downs of payment changes and changes in regulations. There are communities that do fundraising. Because these hospitals provide good jobs and affect, through a multiplier effect other jobs in the community, it's important for the community to invest in keeping those services readily available.

Rural legislators are often very instrumental at the state level. For example in Arizona they created a critical access hospital pool. That’s a way to help subsidize the uncompensated care that these rural and critical access hospitals provide.

SM: Are there other difficulties that rural hospitals are facing that we need to be aware of?

DD:  I think as more consumers and individuals are covered and they're paying more out of pocket in the form of cost-sharing and deductibles and copays, individuals really want more transparency and accountability for the services they're receiving, both in hospitals and clinics.

[Individuals will want to know] what are the real costs of this particular procedure, this particular service at the hospital? And people will be able to compare.

Your choices aren't as robust in a rural area. But a hospital can't be all things to all people. You have to figure out a way, if you don't provide this service, if there is another entity that you can partner with to make sure that the community you serve gets the services it’s demanding.