Rural areas desperately need more physicians, but even adding residency slots isn't a simple solution

Illustration by Shoshana Gordon, Axios

Rural areas don't have enough physicians because rural hospitals have not been able to add residency slots. Adding more slots may sound simple, but until the Covid-19 relief bill, slots, which are funded through Medicare, were capped. The relief bill added 1,000 residency slots and required 10% of those to be granted to rural hospitals, but few have applied. Maya Goldman of Axios Vitals reports, "Just seven of the 199 hospitals that have received federal dollars for new residency slots in initial funding rounds are in rural areas, federal health officials confirmed."

Because residents are more likely to stay where they completed their training, adding slots is considered the most reliable way for areas to "grow their own" doctors. However, hospitals must have the capacity to go through the slot application process and have the resources to train more physicians. Goldman explains, "A combination of limited infrastructure and staff to run residency programs, as well as a lack of awareness about the funding opportunity, has prevented more hospitals from applying, said Carrie Cochran-McClain, chief policy officer of the National Rural Health Association. . . ."

Part of the reason more funding has gone to more urban hospitals is because of a reclassification loophole. "The 2021 law requires that 10% of new Medicare-funded residency slots go to rural hospitals or hospitals that are 'treated as being located in a rural area," Goldman reports. "That wording is key: A 2016 court ruling allows urban hospitals meeting requirements to reclassify themselves as rural hospitals for certain financial purposes. Changing geographic classification can boost a hospital's Medicare payment and open them up to more residency funding."

The awards show how urban hospitals used reclassification to add slot funding. "In the first tranche of new residency slots awarded, about 6% went to geographically rural hospitals, while 42% went to geographically urban hospitals that reclassified as rural, according to NRHA data," Goldman adds. "NRHA wants the law changed so reclassified urban hospitals no longer qualify for the 10% rural residency slot allotment, said Cochran-McClain."