Affiliation with another facility and focus on outpatient services are keys to survival for rural hospitals, studies show

"As rural hospitals begin to face the financial pinch of life without Covid-19 stimulus funds, two new studies have found ways they are more likely to keep the doors open," Liz Carey reports for The Daily Yonder.

The first study, by the North Carolina Rural Health Research Program, "found that changing payment policies, methods, and conditions to support outpatient services is a key to rural hospitals’ financial sustainability," Carey reports. "Researchers found that hospitals that focus their budgets on the services their communities are actually using are more financially successful. The study found that the typical rural hospital gets nearly 75% of its revenue from outpatient services. By focusing their budgets on those services, as opposed to spending more money on what it needs to provide inpatient services, a rural hospital can improve its financial situation."

The second study found that "financially struggling hospitals are more successful if they affiliate themselves with another health-care facility," Carey reports. "Between 2007 and 2019, the percentage of rural hospitals in financial distress increased from 25% to 30%, the study said. Looking at 2,237 rural hospitals operating in 2007, the study found that 140 had closed by 2019. Of those, the proportion that affiliated with another hospital increased from just over 31% in 2007 to nearly 47% in 2019. Among the financially distressed hospitals in 2007, those affiliated with another hospital had a lower risk of closure."

However, financially stable hospitals were more likely to close if they affiliated with other health-care organizations, possibly because less-solvent affiliates helped drain their reserves, Carey reports.