The decline of rural hospitals has been a slow-moving train wreck. It now is accelerating. Since 2010, 102 rural hospitals have closed. As bad as that may seem, things are likely to get much worse, and soon. Currently, 46 percent of rural hospitals nationally operate at a loss, compared to 44 percent in 2018 and 40 percent in 2017. Due to financial strains, nearly 700 rural hospitals are financially vulnerable and at high risk of closure, representing more than one-third of rural hospitals in the U.S.
Hospitals in our state provide access to high quality care for thousands to rural Nebraskans; however, Nebraska is not immune to these national trends. Nebraska has had only one hospital close during this time period but many hospitals in rural Nebraska are struggling with low or quickly declining operating margins. The most recent data shows that 39 out of 71 rural Nebraska hospitals have a 2 percent or less operating margin. An addition, 29 rural hospitals experienced negative operating margins in 2018 with 22 of those having a minus-3 percent operating margin or worse.
There are a number of factors converging to place downward pressure on rural hospital operating margins. These factors include federal government policies such as Sequestration and Bad Debt, health disparities (rural populations are older, sicker and less affluent), low patient volumes, the shifting nature of patient care, population migration and staff recruitment and retention.
It’s not one or two issues, it’s a whole swatch of things rural hospitals have to confront. As a result, many hospitals across the state have had to cut costs by reducing some services, such as obstetrics, long-term care or assisted living.
You’re going to start see hospitals continue to make decisions about what they can sustain based on their patient volumes and based on their revenue. As the things you’re making a margin on continue to evaporate, then you start looking at what services you can afford to continue.
There is a growing sense of urgency. When a hospital closes, the community struggles. Pharmacies close, grocery stores close, companies choose not to locate to a place where their employees won’t have access to a hospital. More is at stake, it seems, than convenient access to the services hospitals provide.
How many more rural health hospitals need to close or cut their services for meaningful action to be taken? We all have a responsibility to take action — rural providers, community leaders and state and federal policymakers, to stop the bleeding and prevent further rural hospital closures. If we do not, millions of rural citizens will lose direct access to care nationally while local economies will suffer in those communities.
All of this is happening during the longest uninterrupted period of economic growth in U.S. history, which should be added cause for concern. In other words, what recently may have looked like a slow-moving train wreck now should be accompanied by flashing red lights and blaring sirens.