Report Underscores the Struggle of Rural Hospitals

Illustration courtesy of Navigant

An estimated 430 rural hospitals, including 17 in Iowa, are in danger of closing unless their financial outlook improves, a situation that has broad ramifications not just for access to health care but those communities’ economic livelihoods. That’s according to an analysis from the consulting firm Navigant, which found that about two-thirds of states have at least five rural hospitals at high financial risk of closing. (Navigant did not identify the individual hospitals.)

Dozens of rural hospitals have already closed nationwide this decade. About two-thirds of rural hospitals now at high risk of shuttering are considered essential to their localities for several reasons: They serve vulnerable populations, are geographically isolated and employ a sizeable share of residents.

Rural hospitals are essential to the health of the 60 million Americans who live in small, isolated communities. Beyond providing care, hospitals are also economic engines, often the largest local (or even regional) employers and drivers of additional businesses and jobs to communities. But for close to three decades, rural population growth has been significantly lower than urban areas, a factor contributing to the closing of 95 rural hospitals across 26 states since 2010. And the economic effects are immediate — one study found that when a community loses its hospital, per capita income falls 4 percent and the unemployment rate rises 1.6 percent.

The Navigant analysis examined the financial viability (total operating margin, days cash on hand and debt-to-capitalization ratio) of rural hospitals nationwide. The results show show 21 percent or 430 hospitals across 43 states are at high risk of closing primarily due to financial instability. These hospitals represent 21,547 staffed beds, 707,000 annual discharges, 150,000 employees and $21.2 billion total patient revenue.

In Iowa, 96 of the state’s 118 hospitals are considered rural facilities. Together, these hospitals employee more than 28,000 people and account for more than $3.5 billion in total annual revenue. They also care for nearly 600,000 patients each year in their emergency rooms and provide more than $42 million in charity care.

Navigant concluded that rural hospital struggles are rooted in declining inpatient care, increasing uncompensated and under-compensated care for uninsured and people covered by entitlement programs and lack of capital to invest in technology upgrades.