Host: Hey everybody and welcome to Well Said, the University of North Carolina at Chapel Hill’s podcast where we talk with students, faculty and staff about what’s going on on campus and around the world. And today we’re talking about rural health with Mark Holmes and George Pink, the director and deputy director of the North Carolina Rural Health Research Center.
Host: As part of the UNC Shep Center for Health Services Research, the North Carolina Rural Health Research Center is focusing on these big issues that impact rural health care. And one of the biggest issues going on right now is the closure of all these hospitals in these communities. What’s going on with these hospitals and what’s the big role that they play in their communities?
Pink: Rural hospitals face many challenges of long standing issue. For example, in the South in particular, rural hospitals have had more financial problems than most rural hospitals in the rest of the United States. So, rural health is particularly important in the South because of those kinds of financial realities. Also, a more recent phenomenon is the number of rural hospitals that are closing in various communities around the country. About two-thirds of all the rural hospital closures that have happened in the past six years have happened in the South. And there have been 82 closures. Those closures have sort of three important consequences: the residents lose access to inpatient care; secondly, there may be a halo effect, where other providers in the community decide to leave as well; and thirdly, there’s the employment loss because hospitals are typically the largest employer in a town.
Holmes: So, I think the way to think about why rural hospitals are important for the community is, we think of metropolitan areas draw a sense of their identity from the professional sports team, to a large extent rural communities are in the same way. And the hospital fills a number of functions and not only primarily most visibly access to emergent care, labor and delivery. And we may say “Well, it’s OK if I have to drive an hour to go get my teeth cleaned or to go my get my annual checkup.” When you have a broken arm or you’re in active labor or you’ve had a stroke, we know that every minute can be really important for outcomes there. And so that immediate access to care can be really important. But as George also mentioned, the employment effects are also important, too. And if you think about your offering, you wanna locate a new manufacturing facility, for example. And you have two communities that look very similar. You’re gonna choose the one with the hospital because it will offer the care that you and your employees are looking for.
Host: What are the challenges or the problems that are causing these hospitals to have to close down?
Holmes: So, rural hospitals are facing a multitude of challenges, particularly at this point in time. You can start from everything from the local community, and for example, they’re older generally, they are usually lower income, they may be more likely to be uninsured or a bit reliant on public insurance, which means there’s less revenue coming from them from the hospital standpoint. We can also look at sort of market structure and trends in the industry. Technology has meant that we move away from inpatient care. The inpatient portion of the hospital has become less important. I mean, people are more mobile and can choose other places. Consolidation of hospital systems and the mergers and acquisitions that have been developing in small hospitals are more likely to be part of a larger system. We also have policy changes in the sense of the Affordable Care Act, in Medicaid expansion and new models of payment have all led to a trend to make the world a hospital less financially sustainable.
Pink: Many of the trends that Mark just described often induce a financial crisis and the financial crisis is most frequently the reason why a hospital closes. It has too many uninsured patients, has got a lot of bad debt, too much charity care, it’s having trouble meeting its payroll expenses, there could be capital improvements that have not been made in water coming through the roof of the building and patients going elsewhere because of it. And just as well as, probably the most important thing, typically these hospitals that have closed have been losing money for many, many years—this is not a one-month or one-year or even a two-year phenomenon. Typically, they’ve been losing money for many, many years and the culmination of that continuing unprofitability is closure.
Host: Are more of these hospitals closing now than they have in the past or is this been a steady increase over the past couple decades?
Holmes: The closure rate really ramped up around 2008, 2009 — at the period of the Great Recession. I think we’re sort of of the mind that, as George mentioned, these have been long running unprofitable hospitals and the additional stress brought about by the Great Recession led to an increase in the number of closures. That’s been continually ramping up—up until about this year is when that rate seems to have at least slowed, if not abated, and so it’s been the last five years in particular that we’ve seen the highest closure rate.
Host: Earlier on, George mentioned how the southern states are being impacted more by these closures than any other part of the country. So, why is that? Why are more of these hospitals closing in the southern states?
Pink: Many people are of the opinion that Medicaid expansion has been an important factor in the survival of rural hospitals, particularly in the South where most states have not expanded Medicaid. People believe that if hospitals had the access to greater levels of insurance that they would not face the same level financial pressures. However, there is mixed opinion about that. There are some states where they believe because it’s true that they have more insured patients, but they also have high deductible plans and a lot of CEOs will tell you it’s been a wash. Yes, we have more insured patients, but we also have more bad debt. So, it’s not a universally held, there’s no unanimity of opinion about Medicaid expansion, but it’s commonly mentioned as one reason for the South having hospitals that are not doing as well.
Host: As these hospitals continue to close that’s going to leave more and more communities without the medical help that they need. So, what are some of the solutions here? What are some of the ways that we can help these rural hospitals stay in business?
Pink: That’s a very complicated question and problem. There are several proposals out there for a new way of providing rural health care in communities where the hospitals have closed. There are two bills: one there is one in the Senate, sponsored by Senator Grassley, and there’s one in the House sponsored by Representative Graves. They’re in committee, I believe. The Medicare Payment Advisory Commission has proposed two models, as well as the center for Medicare-Medicaid Innovation has some trial models that they’re exploring. Various state associations, as well, particularly Kansas, have developed new models of rural health care that might be a solution to these problems on a long-term basis.
Holmes: I think when we think about what a community does after closure it all depends on the characteristics of the community. What a valley in a northern community in the Rockies may need in terms of being isolated for months at a time may look very differently from a community that’s in southern Alabama and is 12 miles from a university center. We’ve worked in the past with a variety of students to look at very specific case examples and developing what the cost might look for this kind of provider or looking at this kind of structure. And that’s been really rewarding to work with students on a team and one-on-one basis to get them that type of experience they need in order to put them in a great position post-graduation and the experienced of working to solve real world problems. There’s a lot of public policy interest in rural America and a lot of focus on a variety of different aspects. Starting everywhere from the economic prospects that rural communities face across the country. Looking at the opioid crisis, mental health services and the shortage in mental health providers that many of these communities face. It’s important to grapple and address how all these elements fit together. And we know that if the hospital’s a large employer, that’s gonna have direct economic development aspects. If the hospital’s necessary to get that plant in there, that’s gonna be important from an economic standpoint. Seeing the career ladder and what that means from an educational standpoint. You know, we all recognize that the economic aspects, the educational, the health, all these parts of the community fit together and figuring out how to keep our rural hospitals and healthcare systems thriving is an important element to keeping our rural communities thriving.