Most closures stemmed from financial problems, and declining levels of inpatient care contributed to that, the GAO noted. "These declines stemmed from increased competition from federally qualified health systems and other larger health systems, as well as a declining rural population overall. The report notes 2010-16 was the first period of rural population decline in American history," Emily Rappleye reports for Becker's Hospital Review.
The GAO notes that rural hospital closures have spiked before. Between 1985 and 1988, 140 rural hospitals closed, about 5 percent of the total; a new Medicare payment system was blamed.
Medicare and Medicaid are still important factors. The average rural hospital depended on Medicare reimbursements for almost half of gross patient revenue in 2016, and the hospitals that closed were even more likely to rely on Medicare than other rural hospitals; 25 percent of the hospitals that closed were designated "Medicare dependent" in 2013, compared to 9 percent of all rural hospitals.
Because of that dependence, reductions in Medicare reimbursements and bad debs disproportionately hurt rural hospitals' bottom lines, the GAO found. Rural hospitals rely more on Medicaid too, so those in states that expanded Medicaid were far less likely to close than those in states that didn't
Most of the hospital closures — 77 percent — happened in the South, where few states expanded Medicaid. Texas, which did not, accounted for 22 percent of the closures, the entire Midwest accounted for only 11 percent, Rappleye reports.
The closed hospitals were more likely to be for-profit faciliites; 36 percent were for-profit, though only 11 percent of rural hospitals were for-profit in 2013, GAO found.
The report also notes that, while 47 percent of the rural hospitals that closed ceased all services, the rest converted to another type of health-care facility, such as an urgent treatment center, primary care, or emergency services, Rappleye reports.