Analysis Shows One-in-Five U.S. Rural Hospitals at High Risk of Closing Unless Financial Situation Improves
February 20 2019 - 7:00AM
Business Wire
Navigant study also suggests potential closures would have
significant negative impact on community health and economic
well-being, particularly in Southern and Midwestern states.
One-in-five U.S. rural hospitals are at a high risk of closing
unless their financial situation improves, according to a new
Navigant (NYSE: NCI) analysis of publicly available data. The study
also shows that 64% of these at-risk rural hospitals are considered
essential to the health and economic well-being of their
communities.
The analysis, which examines the financial viability and
community essentiality of more than 2,000 rural hospitals
nationwide, suggests 21% are at high risk of closing based on their
total operating margin, days cash on hand, and
debt-to-capitalization ratio. This equates to 430 hospitals across
43 states that employ 150,000 people.
Further review of the community essentiality (trauma status,
service to vulnerable populations, geographic isolation, economic
impact) of rural hospitals at high financial risk suggests 64% or
277 of these hospitals are considered essential to their
community’s health and economic well-being. In 31 states, at least
half of these financially distressed rural hospitals are considered
essential.
Southern and Midwestern states, including Mississippi, Alabama,
Kansas, Georgia, and Minnesota, are projected to be impacted the
most, the data shows. Click here for detailed state-based data.
“Our analysis shines a new light on a rural hospital crisis that
must be addressed and could significantly worsen with any downturn
in the economy,” said co-author David Mosley, managing director at
Navigant. “Local, state, and federal politicians, as well as health
system administrators, need to act.”
Legislative action, health system partnerships needed
Multiple factors have contributed to this crisis, the study
suggests. They include low rural population growth, payer mix
degradation, excess hospital capacity due to declining inpatient
care, and an inability for hospitals to leverage technology due to
a lack of capital.
Potential solutions presented by the authors include advancing
legislation around telehealth reimbursement and such bills as the
bipartisan Rural Emergency Acute Care Hospital (REACH) Act.
Reintroduced in 2017 by Sens. Chuck Grassley, R-Iowa, Amy
Klobuchar, D-Minn., and Cory Gardner, R-Colo., the REACH Act would
create a new Medicare classification under which rural hospitals
would offer emergency and outpatient services but no longer have
inpatient beds.
Rural hospital collaboration with academic and regional health
systems offers another possible solution to the rural hospital
crisis. Partnership areas include telehealth, revenue cycle, human
capital, electronic health record use, physician training, and
clinical optimization.
“Ensuring rural access demands that we embrace collaboration and
technology,” said Bruce Siegel MD, MPH, CEO of America’s Essential
Hospitals. “Telehealth and partnerships between rural hospitals and
tertiary centers will be key to ensuring the right care is
delivered at the right time."
“Collaborating with academic and large health systems allows
rural hospitals to leverage the resources of these better funded
peers and develop a hub and spoke network of clinical care that
augments rural services,” said Navigant Managing Director and
co-author Daniel DeBehnke, MD, MBA, a former academic health system
CEO.
About Navigant
Navigant Consulting, Inc. (NYSE: NCI) is a specialized, global
professional services firm that helps clients take control of their
future. Navigant’s professionals apply deep industry knowledge,
substantive technical expertise, and an enterprising approach to
help clients build, manage, and/or protect their business
interests. With a focus on markets and clients facing
transformational change and significant regulatory or legal
pressures, the firm primarily serves clients in the healthcare,
energy, and financial services industries. Across a range of
advisory, consulting, outsourcing, and technology/analytics
services, Navigant’s practitioners bring sharp insight that
pinpoints opportunities and delivers powerful results. More
information about Navigant can be found at navigant.com.
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