Reviving our Rural Hospitals: A Prescription for Healing Appalachian Economies and Improving Medical Care

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As the Delta variant drives an increase in coronavirus cases nationwide, medical experts and local leaders are looking to area hospital capacity as a key indicator of community preparedness and public health resiliency. However, for families living in rural communities across Appalachia, visiting the closest hospital can mean an hours-long drive and uncertain availability of patient bed space once they arrive. Even if inpatient beds are offered, these families risk dire health outcomes by navigating such lengthy commutes during emergency situations. Although their area hospital may not be the sole provider of care, it often treats the sickest patients and tends to emergent cases that other small clinics, pharmacies, and family practices cannot accommodate.

So why have many communities, particularly those in rural and economically distressed areas of Appalachia, been left to fend for themselves during a public health crisis?  In many cases, the answers lie in the 121 rural hospital closures in the U.S. since 2010.  Often resulting from chronic underfunding and poor management, these closures have been taking a toll on struggling local economies and patient health outcomes long before the current pandemic.  In fact, a 2019 survey from NPR and the Robert Wood Johnson Foundation revealed that more than one in four rural Americans said they had been unable to access medical care when they needed it, with a combined 45% pointing to location inaccessibility or appointment unavailability as a primary source of their healthcare barriers.

However, perhaps more pressing than local topography and physical distance are the economic obstacles facing rural health care providers. One third of all rural hospitals in the U.S. are categorized as “vulnerable” to closure due to financial challenges, while roughly 41% report operating at a loss. Many rely heavily on Medicaid and Medicare reimbursement revenues from their underinsured rural service populations, which also tend to skew older, poorer, and more at-risk for chronic health conditions.  Conversely, facilities in metropolitan centers are more likely to serve a higher proportion of relatively affluent, privately-insured patients with reimbursement rates that often double federally-funded payments.  Consequently, rural hospitals are left with less revenue from private insurers to compensate for the disproportionately higher costs of underfunded indigent and elderly care. Because of this heavier reliance on Medicaid and Medicare reimbursement, rural hospitals serve as a sort of public institution, applying their taxpayer investments to fulfill a public health service instead of generating profit for shareholders or corporate owners.

Under such financial pressures, a 2020 ProPublica investigation into Oklahoma rural hospital closures exposed the desperate and often regrettable choices some local facility leaders felt forced to make in order to remain solvent.  Faced with mounting debts, many entrusted operational control of their facilities to private for-profit management companies that had billed themselves as turnaround experts. Often, this shift in day-to-day management resulted in massive caregiver layoffs, bankruptcy, and fewer viable care options for patients in the region. All told, these rural facilities owned by for-profit companies accounted for 36% of all hospital closures from 2013—2017, yet comprised only 11% of all rural hospitals.

Moreover, rural hospitals struggle with medically skilled workforce shortages and lower patient volumes due to population decline in their service regions.  Physicians and providers frequently leave a community almost immediately after its local hospital shutters, draining the area of medical personnel and creating new staffing challenges for the remaining rural clinics, pharmacies, and small medical practices.  This loss of human capital deprives local coffers of revenue and compounds the gaps in health care infrastructure that impede efforts to rebuild and re-staff provider facilities.

Although these public health challenges for our rural communities have been decades in the making, the consequences are more urgent now than ever before. With the higher prevalence of chronic medical conditions found in rural populations also comes an outsized risk of suffering catastrophic patient outcomes from COVID-19 infections. Fewer care centers within these communities necessitates rationed treatment for all forms of medical emergencies when local outbreaks overrun their bed space and overwork their skeleton crews of providers.  Meanwhile, the lack of medical bandwidth complicates COVID vaccine distribution, hindering vaccination opportunities and prolonging unprotected community spread of the virus.

The public health imperative for addressing rural hospital closures could not be timelier. However, there are also long-term economic reasons for curing this rural healthcare malady.  On average, 14% of the jobs in rural communities are attributable to the health sector. Aside from medical practitioners like nurses and physicians, hospitals often provide hundreds of support staff positions such as janitorial, administrative, billing, and community engagement personnel.  Therefore, when a local hospital closes, the surrounding community bears a direct and secondary loss of, on average, 99 jobs and $5.3 million in wages, salaries, and other quantifiable labor benefits.  Such workforce and capital displacement inflicts social and economic trauma on already-struggling localities and hamstrings efforts to rebuild prosperity or recover from persistent stagnation.

In light of the vital role that rural hospitals play in their communities, policymakers are exploring potential solutions to revive local healthcare systems. Last year, President Biden announced plans to create a Public Health Jobs Corps consisting of 100,000 contact-tracers and infection prevention workers to support the COVID-19 pandemic response in vulnerable communities.  Some states have also experimented with changes in fee structures away from traditional fee-for-service models. In 2017, the Pennsylvania Centers for Medicare and Medicaid Services adopted a global budget pilot which pays hospitals a fixed amount in advance for all inpatient and outpatient services within a certain timeframe. The initiative offers a steady funding source for the hospitals while empowering them to invest in preventative treatments and quality care options that are responsive to their patients’ needs.

While no single proposed policy remedy can credibly promise to cure the precarious position of Appalachia’s public health infrastructure overnight, transformative interventions and intentional investments at scale are needed for any legislative or regulatory prescription.  There can be little question that access to affordable and proximately available medical care is a foundation of any movement to build the American Dream for our forgotten neighbors and overlooked rural communities.  Investing in creative solutions that prioritize preventative, holistic care and reimagine the conventional structures of community hospital networks can promote the overall health and economic vitality of rural neighborhoods nationwide, for the duration of the pandemic and beyond.

Claire Silberman serves as Fahe’s Research and Outreach Coordinator AmeriCorps VISTA through NeighborWorks America. She is on a gap year from Princeton University. In her free time she can be found kayaking or swimming.

Sarah Weintraub serves as Fahe's Policy and Communications AmeriCorps Member through the Appalachia CARES program.

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