As many as 1/3 of rural hospitals in Kentucky are in financial trouble, state auditor says

Rural hospitals have been struggling to remain open, with 48 rural hospitals closing since 2010—including 10 in Texas—and another 283 hospitals, mostly in the South, in trouble, said the National Rural Health Association. Most of the struggling hospitals are in states that chose not to expand Medicaid.

On Monday, Kentucky state Auditor Adam Edelen said that "as many as one-third of Kentucky's rural hospitals are in poor financial shape, and the survival of some will likely depend on their willingness to adopt new business models," Melissa Patrick and Al Cross report for Kentucky Health News, which is published by the Institute for Rural Journalism and Community Issues, which also publishes The Rural Blog.

"Unveiling a nine-month study, Edelen said 15 of the 44 hospitals examined were in 'poor financial health,' and warned, 'Closure may be an unfortunate reality for some,'" Patrick and Cross write. Gov. Steve Beshear argued that the data was dated because it was from 2013, before Kentucky, which has been one of the most successful states under the Affordable Care Act, expanded Medicaid.

Beshear said in a statement: "Hospitals received more than $506 million in 2014 through new Medicaid expansion payments, while seeing significant reductions in uncompensated care costs. Those are huge changes to hospitals’ bottom lines that are not shown here."

Edelen's "report noted that Kentucky hospitals have had higher-than-average penalties from Medicare for readmitting patients within 30 days, a newly implemented feature of the law," Patrick and Cross write. "Forty of the 63 hospitals penalized were rural, and nine of the 39 in the U.S. that got the maximum penalty were in Kentucky."

Edelen, who said the report "is 'a baseline for monitoring' by policymakers at the state and local levels" said "that to survive, rural hospitals must adapt to new business models, such as merging with larger hospitals or hiring them as managers, forming coalitions with other rural hospitals or finding a health-care niche that hasn't been served," Patrick and Cross write.