How America is failing its rural hospitals

This pin represents St. Mark's Hospital in Texas. Starting in 2020, the hospital struggled to pay its mortgage debt. In February 2023, the hospital board voted to shutter inpatient services, meaning overnight care, and cut nearly half the staff. It wasn't enough. By October 2023, the entire hospital shut down. Now, when EMS responds to a 911 call in the area, they're now forced to pick up that patient and either drive them an hour to an hour and 15 minutes into Austin or another 30 minutes or so to come down to Columbus or another 30 minutes to come down to Halitzville. This story is becoming increasingly common in small towns across the United States. It's being called the rural hospital crisis and experts warn it's about to get much worse with some states like Texas at risk of losing nearly half of all small town hospitals in the near future. Small rural communities the hospital is the health care system and so if the hospital closes the patients basically can lose access to all health care. So why are so many rural hospitals in the US shutting down and what does it really mean for these communities? Ready? Be cool. Lay down. Before we get into it, it's worth noting that this is the second of three videos we're doing on how emergency help gets to remote places. You're just going to leave. Rural areas in the US often struggle to get the same services as more populated regions. We wanted to explore what some of those challenges look like and what might be done to make things better. And we're grateful to our sponsor, T-Mobile, for supporting this video. T-Mobile has invested billions to bring 5G coverage across the US, and they're committed to supporting first responders and their families with exclusive savings. You can learn more about that in the link below. T-Mobile didn't dictate the content of this video, but they did make our reporting possible. And now back to the video. Well, the simple reason that rural hospitals are losing money is because they're not paid enough by health insurance plans to cover the cost of delivering services in rural areas. Hospitals can make money in a few different ways, but the largest one is fairly obvious. Fees for their services, inpatient and outpatient care. While small town hospitals have less patients than their urban counterparts, though they are typically reimbursed at the same rate for the same services, which is a problem because cost per patient is higher in small rural hospitals and that largely has to do with fixed cost. It's just extremely costly to run a hospital. Medical equipment and building maintenance aren't less expensive because a hospital has less patients and doctors and nurses are typically salaried. It's not like they're getting paid by the patient. All in all, in terms of fixed costs, it's not cheaper to treat a heart attack or broken arm in rural Texas than it is in Dallas or Austin. Every dollar we spend, we may get reimbursed, you know, 30 cents. This can get kind of confusing, so I'm going to simplify it. Let's break it down. There are really two ways a hospital can get reimbursed for care. Private insurance like, you know, Blue Cross, Blue Shield, Sigma, United, and public insurance like Medicare and Medicaid. Data from the KFF found that Medicare covered a larger share of impatient care in rural areas, which according to the American Hospital Association only reimbured 83 cents for every dollar spent on inpatient care. That's collectively billions of dollars lost year after year. The trouble is for many small town hospitals, this is often the best case scenario. Major reason many small rural hospitals are losing money is not Medicare and it's not Medicaid. It's commercial insurance plans, private insurance plans that are underpaying. When it comes time to renegotiate a contract, private insurers kind of have small rural hospitals in a chokeold. Contracts with insurers are typically renegotiated every year to account for things like inflation. One of these insurance companies delayed for about 8 months, which meant the hospital was losing money on reimbursement. They equated that to about $10 million in in revenue that they lost every month. A major health system might be able to afford 10 million in losses here or there, but a small hospital barely breaking even certainly can't. And a newer plan called Medicare Advantage is creating an entirely new set of issues. More than half of the Medicare beneficiaries in the country are now on Medicare Advantage plans. It's essentially a Medicare option through a private insurer and they reimburse less, sometimes not at all and overall way less reliably. So traditional Medicare patient, you get paid in 14 days. Medicare Advantage could be 45, 60, 90. Pair that with impending cuts to programs like Medicare and Medicaid, and this crisis is likely about to get much worse. As small town hospitals sink further into the red, they're forced to make really difficult decisions. When a hospital is struggling financially, they're often forced to cut services. One of the first to go is usually labor and delivery. This report found that 25% of rural hospitals have had to drop OB services since 2011. Cancer care is also being cut at alarming rates. Nearly half the hospitals that once offered chemotherapy in Texas had to shut down the service between 2014 and 2022. This leaves millions of people without access to care. And why we keep hearing the metaphor desert? Hundreds of thousands of rural Ohioans live in some form of healthcare desert. 5.6 million women in this country live in a maternity desert. County leaders call this region a healthcare desert. So what's to be done? This isn't a new problem. For decades now, rural hospitals have been sort of in this perennial state of crisis. and Congress has been trying to solve it for decades with a range of programs. So, for example, the critical access hospital payment program has been around since the '9s. Um, it reimburses hospitals using an approach called costbased reimbursement at 101% of their Medicare costs. Critical access hospitals have to meet a certain criteria though, so the program doesn't work for every hospital. Another option is a program called the rural emergency hospital program. It allows a hospital to get a very large uh multi-million dollar annual grant from the federal government, but only if it eliminates inpatient services. Not everyone loves this idea. Why you're helping it in the first place is to avoid losing services. So to say we'll only help you if you eliminate services is kind of counter to the whole idea that you're trying the goal you're trying to achieve. What rural hospitals might need are more options. rural communities are so heterogeneous and their population health needs are so heterogeneous and so I think at the end of the day the decision is governed by the patients you serve. We we tend to take our local hospitals for granted um because they've been there since we were a kid. They've been there when our parents were kids. I mean you always hear if a town loses their hospital that the town starts to die. Not only do you lose a major employer of the county or the city in these small rural settings, you're also losing one of the only healthcare type institutions that maybe within an hour, maybe an hour and a half. The simplest solution really is to pay the rural hospitals uh enough to be able to cover the cost of delivering their services. That's not special grants or programs. It's simply a matter of every health insurance plan paying adequately for the cost of delivering services in rural areas. We want to try to continue this model of not having a national health care system, but allowing us to to treat ourselves in the different parts of the United States where we're at locally, rurally. Um, we have to see a different type of reimbursement model.