Dr. Mark Holmes: Rural hospital closures
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Nearly 150 rural hospitals have closed, or been converted to other types of facilities, since 2010.
On September 19, 2024, SciLine interviewed: Dr. Mark Holmes, a professor of health policy and management at the University of North Carolina. See the footage and transcript from the interview below, or select ‘Contents’ on the left to skip to specific questions.
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Introduction
[0:00:19]
MARK HOLMES: I’m Mark Holmes and I’m the director of the North Carolina Rural Health Research Center at the University of North Carolina. I study rural hospitals and rural health care more generally.
Interview with SciLine
How many rural hospitals have closed in recent years?
[0:00:37]
MARK HOLMES: Since 2010, 149 rural communities have experienced a loss of their hospital. That has ebbed and flowed over the years, and some years are higher than others. But in 2019, was the highest since we’ve been tracking in 2005. In 2019, there were 17 closures. In 2020, there were 18—so, just a year later—as a new high water mark, and during the pandemic, there was a lot of support from the federal government to help keep hospitals open. We knew that it was important to keep our health care facilities available to help manage the pandemic. And when that money has—when that support has gone away—we’re starting to see those pressures come back again.
Why are so many rural hospitals closing?
[0:01:30]
MARK HOLMES: There’s a number of reasons that are behind this increase in or this number of rural hospital closures, and we can break these into some broad categories. The first would be population, and rural America has changed in the last 25 years. It’s gotten older. The number of places have seen their populations shrink, and rural economies have also been experiencing some setbacks as well, and that makes it challenging for rural hospitals to operate. They have fewer—at the end of the day—customers who are being paid for by public insurance programs like Medicare and Medicaid, which often pay less than commercial private plans. And so that’s created a financial environment with substantial headwinds for many rural hospitals. We also talk about practice. It’s three P’s, I think, is how I generally think about so population, practice. The way we deliver health care has changed over the past few decades, and what used to be a four-day inpatient stay can often be managed on an outpatient basis. And so that means that many of the hospitals that were built 40 years ago are just way too large for the community they have, and they have to heat and cool and maintain an inpatient wing of 25 beds when they might have three or four people each night, and that’s expensive to make to pay for that. A third would be payment. And healthcare overall and the way that insurers pay for healthcare has really changed, and it’s now placing a priority on volume, and so providers, including hospitals, have an incentive to be large and to have to deliver a whole spectrum of healthcare. So that the system manages the primary care that says maybe you should get a hip replacement. And they see the orthopedic surgeon who’s in that system who says, “Yes, let’s do it.” And they go to the hospital where you get that done, and then you go to rehab as part of that system. And so, there’s created this financial incentive for sort of whole-person care that follows the trajectory of an individual. And that may mean rural residents who are going into the city to get their surgery, whereas in the past, they might have gone back to the rural community to get some rehab care and do their follow-up. Now they’re probably more likely to stay in the urban area, and that means again, lower business, fewer customers, fewer patients at the rural hospitals.
How many rural hospitals are losing money, and why?
[0:04:11]
MARK HOLMES: Roughly half of rural hospitals are losing money in any given year. For some hospitals, it’s every year they’re losing money and they’re just drawing down on their cash reserves. For others, they might have a good year and then a bad year, and it depends on how bad the flu season was, or whether they lost a key healthcare professional and so a service they’re no longer able to offer, or they built a new wing to their facility, or something like that. So, there’s a wide variety of what’s going on with that. But generally, in any given year, roughly half of rural hospitals are losing money, and it’s really hard for that to be sustainable, and we know that that number has increased over time. It was 30% a few years ago and 40% a couple of years ago, and now it’s up to roughly 50% depending on how exactly you count it. But if one in two rural hospitals are losing money, that’s really making a challenge to have that as a sustainable part of our healthcare system, and something needs to be done in order to keep them around and available for rural residents.
What are rural emergency hospitals?
[0:05:23]
MARK HOLMES: So, Congress has a history of looking at rural hospitals and figuring out and coming up with new proposed—new models—and saying, “All right, well, this is a pressure they’re facing. Can we tweak something over here and allow them a path forward?” And so, the most recent one is this rural emergency hospital, and we should think of this as basically a hospital that doesn’t admit patients. When a hospital closes, usually, one of the first things that the community notices is the loss of that emergency room. So, the rural emergency hospital is built around that as a design and says, we’re going to support an emergency room in this community, but operate them without the more you know, the traditional part of a hospital, which is inpatient and admissions. So, there are other services that these REHS’s can provide, but generally they’re located in smaller communities where rural, where the hospital was facing headwinds and probably was looking at potentially closing or changing its service delivery substantially, and 30 hospitals have availed themselves to convert to these rural emergency hospitals since January 1, 2023.
What are the economic and community impacts when a hospital closes?
[0:06:38]
MARK HOLMES: It’s easiest for us to see how a hospital affects the health and the health care available in a community, but it has much broader implications than that. Often, a hospital is the largest or second largest employer in a rural town, and so you’re seeing a closure of a business again, or an employer that had 100, 150 employees, depending on the size, and that certainly has an economic impact. Beyond—and not just the employees there—but all the services that the hospital, either directly contracted for or indirectly provided. The florist shop that was across the street where people would stop and grab flowers before they went to visit their loved one in the hospital. The ground or the landscaper who provided the services to the hospital. The food distributors who made sure that the cafeteria had all the food they needed. So, that closure can have ripple effects throughout the community, and beyond that, we know that a hospital is important for people wanting to move there or remain in there. Large metropolitan areas often take a lot of pride in their professional athletic teams, but it’s the same goes for rural communities with their hospital. It’s a source of identity and, you know, rallying around and gives the community something that you know, that they’re proud of and really can relate to. And so, when that closes, it makes it harder. And, you know, there are that’s clearly a valuable amenity that’s available in that community. And so, retention and people will look at it and say, Well, I’m getting older. I need easy access to health care. This place doesn’t work for me anymore. When we’ve looked at rural communities that have expanded and added a hospital at the groundbreaking, is usually the mayor or the president of the local economic development outfit will talk about the importance of the hospital in terms of encouraging people to move there. Try to recruit a teacher to a new you know, a new teacher to the school when there’s no hospital or a manufacturing plant, when the closest emergency room is 20 miles away, and workers compensation rates can depend on how close you are to the nearest ED, so it has this broad economic impact as well. And finally, the hospital often serves as a nexus of social activity, and that social activity in terms of like getting together on a Friday night, but in terms of like investing and working together, that community fabric. When we’ve done some site visits and case studies, for example, to look at how rural communities can thrive when they face headwinds. And a common through line through those stories was the role the hospital played. They’re the ones who, on Tuesday night, opened up the boardroom. They bought dinner for local community activists to get together and say, “What are we going to do about the teenage drunk driving problem that we’ve had? What are we going to do about the opioid crisis?” And the staff of the hospital might support that. So, the hospital often plays this broader role in terms of public health as well, not just health care.
What can be done to improve access to health care in rural places?
[0:09:45]
MARK HOLMES: There are a number of different approaches that are being tried, but ultimately they really—many of them come down to the question of volume, and what I mean by that is it’s just more expensive to deliver healthcare in rural communities because when I have a hospital wing and I have three patients in it that’s on a per bed basis, on a per patient basis, that’s just more expensive than if you have a larger facility. And so, we need to think about payment models that recognize the reality of what rural hospital—what rural hospital finances look like—and it’s important to all of us, not just people who live in rural communities. If you’ve ever gone camping in a mountainous area, or gone to the beach and got stung by a jellyfish, or been driving down the interstate between cities, it’s important to all of us because we want to be able to have access to that health care when we need it, and it’s clearly important to the places in rural America that provide our food, fuel, and fun, and it’s important to make sure that our rural health care system continues to thrive.
