From the July 2022 issue of HealthCare Business News magazine
By Julia Harris
The Biden administration and Congress should take steps to shore up the finances of rural hospitals in order to prevent a spike in hospital closures after the public health emergency (PHE) — and the federal financial relief that it provided for the last two years — come to an end.
Before COVID-19, hospital closings were rising in rural America, with 116 rural hospital closures from 2010 to 2019. Federal COVID-related relief over the past two years helped to slow the pace of closures: Rural health care providers have received roughly $11 billion under the CARES Act of 2020 and about another $7.4 billion under the American Rescue Plan of 2021. But that aid masked the fact that the underlying finances of rural hospitals continued to deteriorate, especially with new financial pressures brought on by the pandemic.
To obtain on-the-ground insights into today’s rural healthcare landscape, the Bipartisan Policy Center (BPC) conducted interviews over the last year with rural hospital leaders from eight states — Iowa, Minnesota, Montana, Nebraska, Nevada, North Dakota, South Dakota, and Wyoming — as well as with health policy experts from federal and state government, national organizations, provider organizations, and academia.
All of the hospital association officials that BPC interviewed said that at least some hospitals in their state had negative total operating margins for three straight years, according to the latest available cost report data. The share of hospitals experiencing persistent financial losses ranged from 6% in Nevada to 38% in Wyoming. An even greater share of hospitals experienced losses on patient care alone, including half of Iowa’s 115 acute care hospitals over a three-year period.
Assessing the financial vulnerability of rural hospitals nationally, BPC found that out of 2,176 such hospitals, 441 faced three or more concurrent financial risk factors, putting them at risk of reducing their services or closing. Those risk factors included negative total operating margins, negative operating margins on patient services alone, negative current net assets, and negative total net assets.
Additionally, the impact of COVID-19 on the healthcare workforce has been staggering. Stakeholders consistently reported that attrition was present across every level of the health care system — from executives, to nurses, to surgical technicians, to custodial and environment services employees. Retaining workers and ensuring adequate staffing levels were among the top and most vexing challenges facing health systems and translated to unprecedented staffing costs for many hospitals.
