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New Data Reveals More Rural Hospitals Losing Money

February 07, 2018

During the National Rural Health Association’s 2018 Rural Health Policy Institute, new data was presented that reveals that the number of rural hospitals losing money grew to 44 percent over the last year, up from 40 percent during the prior 12 months. In Pennsylvania, which has one of the largest rural populations in the country, more than half (56%) of the state’s 42 rural hospitals are operating with negative total margins. During fiscal year 2016, more than 80 percent had total margins below the 4–6 percent needed for long-term sustainability, including investments in technology, workforce, and services. 

The Chartis Group prepared a report for the rural event that addresses continued financial pressure from policies such as Medicare's two percent cut to provider payments under sequestration and changes to the way the program pays for inpatient hospital stays.

The report, which shows that since 2010, 83 rural hospitals have closed across the country, provides data on the challenges facing rural hospitals:

  • Rural hospitals serve older, poorer, and sicker populations with less access to care
  • Different regions of the country are challenged by different health disparities––Pennsylvania ranks higher (60th  to 80th percentile) for diabetes and opioid and other drug overdoses
  • Rural hospital payor mix is 55 percent governmental compared to 41 percent for non-rural hospitals, so they rely heavily on payments that underfund services

About one in four (3.4 million) Pennsylvanians receive care in rural hospitals. These hospitals serve as hubs for health and community-related services, and often are the largest employer for their community. In total, they support 43,760 jobs directly and indirectly, and contribute $6.1 billion dollars to the economy.

Several Medicare policies that are designed to support access to care in rural communities have required legislative action by Congress. This week, Congress is working to advance legislation that would provide a short-term funding extension for the federal government. The most recent funding stopgap is set to expire on February 8. On Tuesday evening, the U.S. House passed a continuing resolution through March 23, which also incorporates a package of health care policies including the following rural health priorities:

  • Extends Medicare Dependent Hospital program and Low-Volume Payment Adjustment for two years in a straight policy extension
  • Extends the moratorium of direct supervision requirements for outpatient therapeutic services in critical access hospitals and small rural hospitals for 2017
  • Extends the home health rural add-on for five-years
  • Extends the two percent urban, three percent rural, and 22.6 percent super rural ground ambulance add-on payments for five years

The House and U.S. Senate are still negotiating the final terms of the funding bill. HAP has advocated for swift Congressional action to preserve crucial policies that Pennsylvania’s rural hospitals depend upon for stability and predictability, and to protect hospital services and jobs for vulnerable rural communities.

At the state level, HAP is advocating for policies that will support rural hospitals and health care, including adequate payment for critical access hospitals; reliable telemedicine payments; full practice authority for certified nurse practitioners; and practical and effective opioid policies.

For additional information about HAP’s rural hospital advocacy efforts, contact Laura Stevens Kent, HAP’s vice president, federal legislative advocacy, or Stephanie Watkins, HAP’s vice president, state legislative advocacy.

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