Study: Over 1/5 of rural hospitals on edge of bankruptcy

Breckinridge Memorial Hospital in Hardinsburg, Ky., usually
has a week's worth of cash on hand. (Photo by Al Cross)

Five percent of rural hospitals in the U.S. have closed since 2010, and more than 20 percent of those still open are at high risk of closure unless their fortunes improve. "The situation would significantly worsen in the case of an economic downturn, something that’s looming given that the country is in its longest period of economic expansion ever," according to a new report by business analysts Navigant Consulting. In some states such as Alabama, Alaska and Mississippi, almost half of rural hospitals are at risk of closure, Navigant says.

The consultancy analyzed Centers for Medicare and Medicaid Services data from 2,045 rural hospitals and found that 21 percent — about 430, in 43 states — are on the edge of bankruptcy. The closure of a rural hospital can devastate the local economy, since rural hospitals are often the biggest employers nearby. "One study found that when a community loses its hospital, per capita income falls by 4 percent and the unemployment rate rises by 1.6 percent," Navigant Managing Director Dave Mosley reports.

The report says easing reimbursement for telehealth services could help rural hospitals by enabling partnerships with larger regional hospitals, and advises rural hospitals to lobby for legislative changes to make that happen.