Nearly 61% of all rural hospitals did not have intensive care beds as of 2018, up from 59% in 2015, according to a recently updated analysis from the Chartis Center for Rural Health.
"If COVID-19 tracks similar to how the seasonal flu arrives in rural areas, a little later but more severe because of more underlying medical illnesses, it will only take one or two critically ill families to completely swamp a rural facility's capacity," said Dr. Roger Ray, a physician consulting director at Chartis. "It's a highly vulnerable moment for these rural communities."
About 46% of the country's 1,844 rural hospitals were operating in the red as of 2019, up from 40% in 2017. Hospitals in states that didn't expand Medicaid fared worse, Chartis found.
Declining admissions, changing payer mixes and labor shortages are also roiling rural hospitals.
More patients are bypassing their rural hospital as they seek care elsewhere, Guidehouse's data show. Three out of four patients who live in rural areas with a hospital didn't seek care there, compared to 35% and 23% of suburban and urban patients, respectively.
While rural hospitals should be able to keep most of their counties' least-acute cases, 68% of those rural patients still left their communities. This has an economic ripple effect, said Dr. Daniel DeBehnke, a Guidehouse partner and a former academic health system CEO.
"Every patient that outmigrates for care that's also offered in their community represents a revenue loss for the local hospital, as well as revenue leaving the local economy," he said. "The patients rural hospitals are supposed to serve now appear even less likely to use them."
Rural residents tend to be older and poorer, and their communities often have higher rates of uninsured, Medicaid and Medicare patients, leading to more uncompensated care and declining revenues.
Populations are also declining, which translates to lower occupancy levels. Many hospitals were built after an infusion of federal funds via the Hill-Burton Act, designed to provide a level and volume of care that is no longer needed, Guidehouse researchers said. The average total occupancy rate for rural hospitals was 52.2% in 2016, which was well above the acute occupancy rate of 37.8%, a Modern Healthcare analysis revealed.
"Having inpatient beds to care for some types of patients are important, but the way inpatient capacity looks in the future does not match how it looked in the past," Mosley said.
Labor shortages acutely impact rural hospitals, which have a harder time recruiting doctors and nurses. While clinical partnerships with larger health systems that facilitate virtual consultations have helped mitigate labor shortages, more than 7,200 regions across the country have been designated health professional shortage areas, with nearly 60% of them in rural areas, according to the Health Resources and Services Administration. Moreover, the number of physicians per 10,000 people is 13.1 in rural communities, compared to 31.2 in urban areas.
Also, coding, billing and collection systems typically aren't as robust at smaller hospitals, which means they might not be earning as much revenue as their larger counterparts.
Coordinating care with tertiary and quaternary health systems will be key as it relates to telehealth, revenue cycle, staffing, EHR use, physician training, and clinical optimization, as well as partnerships with local and state governments, Mosley said.
Experts hope that the bipartisan Rural Emergency Acute Care Hospital Act will also help. It would create a new Medicare classification that would allow rural hospitals to offer emergency and outpatient services but no longer have inpatient beds. Payment rates would equal 110% of the reasonable cost of providing outpatient and transportation services.
The $2 trillion stimulus bill includes a 20% Medicare inpatient reimbursement bump for COVID-19 patients, a delay in 2% annual cuts to Medicare payments via sequestration, an increase in federal Medicaid matching funds and a $100 billion provider relief fund to reimburse expenses and lost revenues. But with roughly 50% revenue declines, those funds could be consumed within two months, which doesn't even account for surge capacity costs related to ramping up beds and supplies, J.P. Morgan analysts said.
While waiting for federal legislation, providers can collaborate with their state legislators to develop state-based Medicare and Medicaid demonstration waivers to change local and regional rules regarding inpatient beds and emergency designation, Guidehouse researchers said.
"There is also an opportunity post-COVID to leverage the traction behind enhancing telehealth nationally, which will benefit rural communities substantially," said Mosley, adding that it will be hard to unwind relaxed regulations.
Even before COVID-19, the outlook for many rural hospitals was bleak, experts said. Eight rural hospitals have closed in 2020 so far, bringing the total to 170 since 2005, according to researchers at the University of North Carolina. The longer people have to travel for emergency care, the more likely they will die, research shows.
"Every type of hospital—urban, large, small, rural—the COVID-19 experience is a reminder to us all of the indispensable nature of hospitals," Ray said.
