Many hospitals are struggling financially, especially rural facilities, even before the COVID-19 pandemic started. These problems can be attributed to low income, high unemployment rates, and a variety of other factors.1
Researchers analyzed the financial viability of 1,004 U.S. rural hospitals during the period between 2011 and 2017. Here is what they found:
- The median overall profit margin declined (from 3% to 2.6% for nonprofit, non-critical access hospitals; from 3.2% to 0.4% for for-profit, critical access hospitals; and from 5.7% to 1.6% for for-profit, non-critical access hospitals).
- In states that did not expand eligibility for Medicaid under the terms of the Affordable Care Act, rural hospital financial viability deteriorated.
“Improving occupancy rate is a necessary condition for rural hospitals to remain financially viable,” concludes Ge Bai, PhD, CPA, the study’s lead author and an associate professor of health policy and management at Johns Hopkins Bloomberg School of Public Health.
About one-third of all acute, general care hospitals in the United States are considered rural.2 Although each facility is small (about 25 beds per hospital, on average), these places collectively serve 60 million Americans. In addition to expanding Medicaid, Bai and colleagues suggested finding ways to provide more emergency care in these areas so that patients who live in remote areas do not have to travel so far for these essential services.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law in March 2020, included $10 billion targeted to rural facilities, which may provide short-term help.2
In the latest federal relief package Congress approved in December, lawmakers included a provision that may help in the long term: eliminating the cap on the number of Medicare-funded residency slots, which could lead to more training opportunities and help address staff shortages.3
- Bai G, Yehia F, Chen W, Anderson GF. Varying trends in the financial viability of US rural hospitals, 2011-17. Health Aff (Millwood) 2020;39:942-948.
- Bai G, Anderson GF. COVID-19 and the financial viability of US rural hospitals, 2011-17. Health Affairs Blog. July 1, 2020.
- American Hospital Association. AHA statement on COVID relief package and government funding bill. Dec. 21, 2020.