Rural hospitals will be hurt the most from Minnesota Medicaid cuts

Government action, such as cuts to Medicaid in Minnesota, has an “outsized impact” on rural residents, Sarah Melotte reports for the Daily Yonder.

The Trump administration recently announced its intent to withhold $259 million from Minnesota’s Medicaid reimbursements due to fraud concerns. CMS Administrator Mehmet Oz said Medicaid funds in Minnesota were going to "bogus" centers for autistic children and a behavioral health organization that had bills showing doctors working 24 hours a day for more than 450 days.

Percentage of hospital revenue coming from low-income health insurance programs. (Map by Sarah Melotte, Daily Yonder, data from the Center for Healthcare Quality and Payment Reform, Click to enlarge)

Rural hospitals are disproportionately affected by these cuts. Melotte explains that rural hospitals are more likely to operate with negative profit margins than urban hospitals, and 39 of Minnesota’s 98 rural hospitals have negative operating margins. This means the rate of uncompensated care will increase even more in these rural hospitals.

Some of these hospitals are able to stay open using non-operating revenue, such as taxes or philanthropy, but this isn’t the case for all of them, reports Melotte. More than 100 rural hospitals throughout the U.S. have had to close in the last decade, causing rural residents to have to travel farther to access the care that they need.

One nonprofit in Minnesota that houses people with disabilities reported to Minnesota Public Radio that “any cuts to Medicaid funding will directly result in reduced services.”

Medicaid now accounts for around 19% of discharges in rural hospitals nationwide, Melotte writes. “In communities where hospitals operate on thin margins, even small cuts in federal spending can destabilize entire systems of care.”

The price of hospital services is driving health care costs and insurance premiums to climb nationwide

Patients and employers are impacted by increases health premiums. 
(Graphic by wildpixel/iStock/Getty+ via Conversation CC)

The American public may perceive hospitals as part of their community’s care network, but in reality, many hospitals and specialty clinics are businesses that strive to make a profit. 

As more medical systems in communities of all sizes have consolidated, hospital pricing has become the biggest driver of rising medical costs and steep health care insurance premium hikes.

“Health insurance premiums in the U.S. significantly increased between 1999 and 2024, outpacing the rate of worker earnings by three times, according to our newly published research in The Journal of the American Medical Association Network Open,” write economic experts Vivian Ho and Salpy Kanimian from Rice University in Houston, Texas, for The Conversation. 

Using federal information and data from the Kaiser Family Foundation, Ho and Kanimian found that “the cost of hospital services increased the most, while the cost of physician services and prescription drugs rose more slowly.”

Many hospitals, including those with nonprofit designations, often aggressively price their services and care well above their costs, Ho and Kanimian point out.

“One study found that for nonprofit health systems, the greatest pay increases between 2012 and 2019 went to hospital CEOs who grew the profits and size of their organizations the most,” Ho and Kanimian explain. In contrast, any emphasis on charity care by those systems was not linked to CEO pay. 

Ho and Kanimian suggest a way to help “ensure that nonprofit hospitals make the health of their local communities a top priority by requiring their boards to disclose their executive compensation guidelines for salary and bonuses, similar to the information that for-profit health care companies disclose to their stockholders.” Such a shift could help communities push for better care and lower costs for patients as determinants of executive pay and bonuses. 

Some economists suggest that “hospital prices should be regulated. This approach involves capping prices for health care services at the most expensive hospitals and restricting price growth for all hospitals,” Ho and Kanimian write.

Fund with $50 billion for rural hospitals got off to a rough start; experts predict the money won't be enough

Delays, last-minute changes and a poor rollout have already plagued the newly created $50 billion rural hospital fund GOP lawmakers put together to pass the One Big Beautiful Bill Act. But analysts predict the "money to be spent over five years is less than the estimated $137 billion in cuts to rural health systems over 10 years," reports Aneeta Mathur-Ashton of U.S. News & World Report.

The Rural Health Transformation Program was designed to help rural hospitals weather Medicaid cuts included in the GOP's package and support longer-term cybersecurity and infrastructure improvements hospitals need to stay afloat; however, fund critics say the program is a short-term solution for a long-term problem.

States that receive RHTP grants must use the funds for at least three purposes outlined by the Centers for Medicare & Medicaid Services (CMS), including "promoting care interventions, paying for health care services and expanding the workforce," Mathur-Ashton explains.

As rural hospitals receive funds, they will need to apply them carefully. Alan Morgan, chief executive officer of the National Rural Health Association, "praised the fund as a 'fabulous program that hopefully, if done correctly, can transform rural health going ahead, to a sustainable model,'" Mathur-Ashton writes.

Some Democrats consider the $50 billion to be a slush fund with unclear guidelines that can't undo the harm planned cuts will cause. "The bill gives [CMS] the authority to determine which applications to approve and deny, but does not spell out the criteria it should be using to do so," Mathur-Ashton reports. 

Rural health advocates say they want states to apply for RHTP, but many are pushing to have the $150 billion in Medicaid cuts rescinded. Morgan told U.S. News, "Congress either later this year or next year, is going to have to repeal those cuts for rural hospitals, or you're just going to see hundreds of rural hospitals close. It's non-workable.”

Hospital advocates have two years to push lawmakers to repeal the most 'painful' parts of Trump's new budget

Hospitals are busy planning how to lobby for changes
in the new law. (Photo by P. Guillaume, Unsplash)

Since President Donald Trump's "One Big Beautiful Bill" became law, news headlines have warned how its Medicaid cuts will devastate local hospital systems. But many of those changes don't take effect until 2028, giving "hospitals [and] their armies of lobbyists and many allies on Capitol Hill. . . two and a half years to persuade lawmakers to rescind them," report Robert King, Amanda Chu and David Lim of Politico. "And 2028 is not only an election year, but a presidential one."

Chris Mitchell, the head of the Iowa Hospital Association, told Politico, "We’re going to talk to our delegation early and often about the impact of these cuts and how looming cuts down the road impact how hospitals run in the interim. . . . Are they really going to want to cut rural hospitals in an election?"

Congress does have a history of "delaying or repealing the painful parts of major legislation," King, Chu and Lim write. "Congress, for example, never allowed a tax on high-end 'Cadillac' insurance plans in 2010’s Affordable Care Act to take effect, and rescinded a tax on medical devices."

The stretch from now until 2028 gives hospital executives and health care advocates time to push Congress into making changes or to pull back cuts. Politico reports, "Several state-based hospital associations say they will ramp up meetings with lawmakers to stress the need for an off-ramp before the 2028 elections."

Eliminating Medicaid cuts comes with a downside for the U.S. economy and cost-weary consumers. "It’ll mean the One Big Beautiful Bill Act will be even more expensive than the Congressional Budget Office expects: $3.4 trillion in deficit spending over a decade," Politico reports. "That will have ramifications across the U.S. economy, exposing Americans to higher interest rates and slower economic growth, budget experts warn."

Opinion: A rural hospital administrator considers what will become of his center if Congress cuts Medicaid

When a rural hospital closes, many residents drive hours to
see a provider or receive specialized care. (Adobe photo)

Over the past 15 years, rural hospitals have struggled to stay afloat, but their already precarious financial state could become a full-blown crisis should Congress slash Medicaid spending. Kevin Stansbury, the chief executive of Lincoln Health in tiny Hugo, Colorado, writes in his opinion for The New York Times, "Congress is considering cuts to Medicaid that could wreak havoc on rural America’s fragile health care system. I worry about our future."

Cuts to federal Medicaid support will be hard on most medical centers, but "rural hospitals will be particularly affected," Stansbury explains. "This is because rural patients are more likely to have health coverage from the government than from commercial insurers. (Nearly three-quarters of our revenue, for example, is from Medicaid and Medicare.)"

In Colorado, almost half of all rural hospitals operate in the red and many have closed services such as labor and delivery units because they are too expensive to run. Stansbury writes, "We also serve fewer patients than big city hospitals but still have fixed costs to stay operational. The result is that we run on minimal or negative operating margins."

When a rural hospital closes, the health of its immediate and surrounding communities suffers. If a severe auto accident happens, victims have to wait longer for emergency services to arrive, or brave traveling to the closest medical center. Residents with chronic conditions are more likely to skip regular care because they must drive hours for a checkup or specialty treatment.

"I know the financial peril my hospital will face if our Medicaid lifeline is severed. But the real damage — the kind that keeps me up at night — will be done to the hardworking people in my rural community," Stansbury adds. "I worry about the residents of our nursing home who just want to grow old here. I worry about the people in Hugo who might forgo care entirely because they can’t get the time off work to visit a Denver hospital. . . .The list goes on."

Cutting Medicaid waste and fraud is one thing "but the cuts on the table go far beyond that," Stansbury writes. "I don’t see waste in Hugo. Rather, Medicaid ensures that primary and emergency care is still accessible here, and that drivers along I-70 will see the blue H on the highway sign and know that help is nearby."

The declining availability of maternity healthcare puts moms and babies at risk, but there are solutions

A lack of maternity care can cause issues for mothers and babies.
(Photo by Christian Bowen, Unsplash)

A lack of access to maternity care can cause deaths, preterm births and health risks for mothers.

According to Cynthia Gyamfi-Bannerman in an article for Medpage Today, 2.3 million reproductive-age individuals and more than 150,000 babies are being affected annually by a lack of labor and delivery units in hospitals.

A March of Dimes report found that, “35% of U.S. counties are maternity care deserts, defined as areas with zero ob/gyns, midwives, or family medicine obstetric providers per 10,000 births,” and that about “70% of birth centers are located in just 10 states,” according to Gyamfi-Bannerman.

The article reported that there were about 50,000 ob/gyns in 2018, “with more than 94% practicing in metropolitan areas.” That number is expected to continue dropping due to “high rates of burnout, high liability burdens, and a possible decrease in interest.”

With the vast majority of ob/gyns in highly populated areas, it leaves an even bigger shortage of maternity care providers in rural areas.

Cross-training healthcare providers may be an answer.
(Photo by Bagoes Ilhamy, Unsplash)

Hospitals are also closing many of their birthing and maternity units. Gymafi-Bannerman wrote that beyond declining birth rates, there aren’t high incentives for hospitals to provide maternity services. “Maternity care has often been considered a money-losing necessity, but even moneymaking, for-profit hospitals are discontinuing obstetric services.”

There are solutions to help with this issue, but it’s a matter of implementing them.

Emily Hedegard and Kate Cough at The Maine Monitor wrote that cross-training, offering stipends, training future healthcare providers in rural areas, and paying maternity healthcare providers more may be a start. As maternity care has been considered money-losing for hospitals, some of these solutions may not be as feasible.

However, “One of the most approachable solutions to the rural health care crisis, said several experts, and one that can be implemented immediately, is making better use of providers who are already part of the community,” according to Hedegard and Cough.

A new proposal to cut down on medical research costs could lead to less medical research

Less funding could lead to less
medical research. (CDC photo)

The Trump Administration proposed to reduce the size of medical research grants conducted by institutions, including hospitals and state universities.

If it goes through, indirect medical research funds would be reduced to a set 15%. However, the proposal has been “put on hold by a federal court,” according to an article by Emily Badger, Aatish Bhatia, Irineo Cabreros, Eli Murray, Francesca Paris, Margot Sanger-Katz and Ethan Singer at The New York Times.

The Times reported that in 2024, $32 billion was spent on medical research, with $23 billion having gone toward direct costs and the remaining $9 billion toward indirect costs. These indirect costs include laboratory upkeep, access to hazardous materials disposal, utility bills and administrative staff. The term itself isn’t very descriptive, but recipients say the costs are necessary for research operations.

A set 15% for the indirect costs would reduce overall funding by $4 billion to $5 billion a year according to the Times. The Times reports, “The White House said the savings would be reinvested in more research, but the rate cuts would open up sizable budget holes in most projects at research institutions.”

Heather Pierce, senior director for science policy at the Association of American Medical Colleges, told the Times, “‘A slash this drastic in total research funding slows research’… And slower scientific progress, she said, would affect anyone who depends on the development of new treatments, medical interventions and diagnostic tools.”

Hospital monopoly in Appalachia doesn't meet benchmarks; some residents say they're scared to seek care

Ballad Health's Indian Path Community Hospital has an
average ER wait time of 43 minutes. (Ballad Health photo)

The lack of choices for hospitals in parts of northeastern Tennessee and southwestern Virginia has left some residents fearful of getting care at its facilities, but hospital officials deny many patient complaints and tie their quality of care troubles to Covid-19 and nursing shortages, reports Brett Kelman of KFF Health News. "Ballad Health is the only option for hospital care in a large swath of Appalachia. . . .Lawmakers in both states "waived federal antitrust laws so two rival health systems could merge," which made Ballad Health the "largest state-sanctioned hospital monopoly in the nation."

Six years ago, lawmakers allowed the merger to prevent more hospital closures. To than end, Ballad Health has kept most of its facilities open; however, the system has "fallen short of about three-fourths of the quality-of-care goals set by the states over the last three fiscal years," Kelman explains. Those shortcomings include "failing to meet state benchmarks on infections, mortality, emergency room speed, and patient satisfaction."

Ballad's lack of consistent care has left "residents wary, afraid, or unwilling to seek care at Ballad hospitals. . according to written complaints to the Tennessee government and state lawmakers, public hearing testimony, and KFF Health News interviews," Kelman reports. "Many of those who submitted complaints or were interviewed allege that paper-thin staffing at Ballad hospitals and ERs is the root cause of the monopoly’s quality-of-care woes."

Ballad Health CEO Alan Levine defended the system's record and "said the hospitals are rapidly recovering from a quality-of-care slump caused by Covid-19 and a subsequent rise in nursing turnover and staff shortages," Kelman adds. "These issues affected hospitals nationwide, Levine said, and were not related to the Ballad merger or the monopoly it created."

Local government officials from Tennessee joined Levine during his KFF Health News interview. "As Levine spoke in a boardroom at Ballad’s hilltop headquarters, he was flanked by three local mayors who voiced support for the hospitals and said complaints came from a vocal minority of their constituents," Kelman reports.

But not every government entity echoes that support. Kelman explains, "The Tennessee Department of Health, which has the most direct oversight over Ballad Health. . . has attempted to hold Ballad more accountable for its quality of care in closed-door negotiations." The TDH declined all of KFF's requests to discuss Ballad's record.

Given the system's long list of woes, some residents wish the merger had been rejected. "Joe Macione, who for years was on the board of Wellmont Health System, one of the rival companies that became Ballad, once publicly advocated for the merger. . . . Macione said state leaders should have admitted years ago that the monopoly was a mistake," Kelman reports. Macione told him, "It has not worked."

Both parties agree medical debt is a burden for many Americans and are working to pass laws that offer relief

Solving Americans' medical debt problems has
bipartisan support. (Photo by K. Sikkema, Unsplash)

Lawmakers from both parties agree too many Americans are saddled with medical debt and the problem requires bipartisan intervention. "Democrats and Republicans in statehouses around the country have been quietly working together to tackle the nation’s medical debt crisis," writes Noam N. Levey of KFF Health News. Florida House Speaker Paul Renner, a conservative Republican, told Levey, "Regardless of their party, regardless of their background . . . any significant medical procedure can place people into bankruptcy. This is a real issue."

Some states have passed laws banning unpaid medical bills from consumer credit reports and "restrict medical providers from placing liens on patients’ homes," Levey writes. A significant medical debt can cause a financial spiral for people who end up "draining savings, taking out second mortgages, or cutting back on food and other essentials."

States are trying different approaches to address the problem. "When Arizona consumer advocates put a measure on the ballot in 2022 to cap interest rates on medical debt, 72% of voters backed the initiative."

Legislative efforts to bar medical debts from consumer reports or to limit a hospital's collection activity vary from state to state. "When Colorado last year became the first state to bar medical debt from residents’ credit reports, just one Republican lawmaker backed the measure," Levey writes. "New Mexico state Sen. Steve Neville, a Republican who backed legislation to restrict aggressive collections against low-income patients in that state, said he was simply being pragmatic."

After its hospital closed, N.C. county works to be the first in the nation to reopen its hospital under ER-only designation

Martin General closed in 2023. (WITN TV photo)

After serving rural Martin County, N.C., for 73 years, Martin General hospital closed its doors, leaving the community's 22,000 residents without a medical care center. Like many rural hospitals across the United States, Martin General had faced shrinking profits and bankruptcy before it closed. But that's not the end of Martin General's story, reports Jaymie Baxley of NC HealthNews. "The county [is working] on a complex plan to resurrect Martin General — a plan that, if successful, could become a blueprint for other rural communities where hospitals have closed."

To make reopening possible, Martin County and hospital officials applied to change Martin General's designation from a full-service hospital to a 'rural emergency hospital,' which means the hospital would offer 24/7 emergency care but give up its inpatient services. Baxley explains, "In exchange, the hospital would receive millions in annual funding from the federal government. . . and be eligible for increased reimbursement rates for some outpatient services covered by Medicare."

But Martin General faced an unusual hurdle to becoming a rural emergency hospital -- it had already closed. Hospitals that had successfully made the switch did so while they were still open, Baxley reports. "Officials in Martin County, however, believe the hospital [could be] reopened using the rural emergency model — something that had not been attempted anywhere else in the nation. . . . Earlier this year, the Centers for Medicare and Medicaid Services confirmed that Martin General could reopen as a rural emergency hospital, clearing the first and arguably most important hurdle in the county’s path."

Martin General's status as a "closed hospital" also means state laws present reopening obstacles. Ben Eisner, interim Martin County manager, told Baxley, “As far as we can tell, this is really the first such situation in the country. Trying to navigate that has certainly been tricky. It’s taken us a number of months to work through some of the regulatory issues of opening a closed hospital as a rural emergency hospital.”

At present, Martin General's resurrection remains a work in progress. "In addition to being the first hospital in the nation to reopen as a rural emergency hospital, Martin General would be the first hospital in the state to receive the designation," Baxley writes. "Because the program is not open to facilities that closed before 2023, it cannot be used to bring back the state’s other shuttered hospitals. . . . But Martin County’s experience could provide a road map for other rural communities facing a similar situation in the future."

A few rural communities chose an emergency-only hospital instead of no local hospital

Becoming an ER-only hospital can be lifeline for 
struggling rural medical centers. (Adobe Stock photo)

Rural hospitals continue to face uphill battles to stay open and fiscally afloat. Many have reduced specialty services to cut losses, and hundreds have shut down. To stem closures, the federal government began offering hospitals the option to remain open as emergency care facilities, allowing for higher Medicare funding and reimbursement payments, reports Anna Claire Vollers for Stateline. "But there's a catch: Participating hospitals must stop all inpatient services. No labor and delivery, no inpatient surgeries, no inpatient psychiatric units."

The new designation means rural emergency centers have two patient care options: Treat and release or stabilize and move to a bigger "flagship" hospital, most likely in a metro or urban area. It's a difficult change for communities, but some have decided an ER-focused hospital is a better alternative than no hospital at all. Vollers writes, "More than two dozen hospitals across the country, including five in Mississippi, have taken the offer. . . . Community reaction has been mixed, said Chad Netterville, director of the Mississippi Hospital Association's Rural Health Alliance."

The change isn't a silver bullet for rural hospitals that face multiple issues, including an aging, sicker population and a payer mix that includes more uninsured or under-insured patients. With that combination, many smaller hospitals are deeply in debt, but their closure could hurt rural residents. "Nearly one-third of rural hospitals around the country are at risk of closing, according to a new report from the Center for Healthcare Quality & Payment Reform, a national health policy research group," Vollers reports. "Research suggests rural hospital closures increase community death rates, harm local economies and force patients to travel farther for care."

With few financial tools available, some "27 hospitals have joined the program, out of 1,700 that researchers estimate are eligible, according to the Cecil G. Sheps Center for Health Services Research at the University of North Carolina," Vollers reports. "In the middle of it all, rural communities are waiting to see what this 'better-than-nothing' approach to health care will mean for them."

Some rural hospitals face a difficult choice of closing in-patient beds to focus instead on 24/7 emergency care

Hospitals with the special designation won't offer
inpatient care. (Photo by G. Rosenke, Unsplash)

Rural hospitals that are struggling financially have an option to receive more federal funding if they focus on emergency services instead of inpatient care. But less than 20 hospitals have made that switch since it became available in January 2023, reports Devna Rose for The Associated Press. 

She writes: "Rural emergency hospitals receive more than $3 million in federal funding a year and higher Medicare reimbursements in exchange for closing all inpatient beds and providing 24/7 emergency care."

There are downsides to the changes, both for rural residents and the hospitals. Rose writes, "People might have to travel further for treatments for illnesses that require inpatient stays, like pneumonia or Covid-19. In some of the communities where hospitals have converted to the new designation, residents are confused about what kind of care they can receive."

According to the AP report: “'It’s ironic' that the facilities that might need the most help can’t afford to take the risk, said Carrie Cochran-McClain, chief policy officer at the National Rural Health Association. She pointed to having to give up certain services and benefits, such as a federal discount program for prescription drugs."

Only 19 hospitals have made the change so far, according to the University of North Carolina's Sheps Center for Health Services Research. But "Brock Slabach, the National Rural Health Association’s chief operations officer, told the AP that upwards of 30 facilities are interested in converting to rural emergency hospitals this year."

Rural residents with diabetes are more likely to suffer from disease complications -- lack of access to care could be why

Diabetes requires continuous care.
(Photo by T. Barbhuiya, Unsplash)

Past studies have shown that rural Americans are more likely to develop type 2 diabetes, and they experienced more struggles trying to manage the disease than their more urban counterparts. In a new study, researchers from the University of Maryland School of Medicine took a closer look at rural residents experiencing diabetes complications such as heart and kidney problems. Their research, which was published in the journal Diabetes Care, showed that these rural populations are at significantly higher risk of suffering from end-stage kidney disease, heart failure and heart attacks, all of which could caused by a lack of access to medical care.

The study's corresponding author, Rozalina McCoy, told UM news: "Those who live in rural areas have a greater risk of experiencing eight out of the eleven complications that we measured compared with those living in cities. . . .They were 15 percent more likely to have dangerously low blood sugar levels, which clearly indicates that their diabetes is not being managed properly."

The study's co-author, Elsa Davis, added, "While our study didn't address why these differences exist, we do know that people living outside of city areas are less likely to receive care from diabetes specialists, to receive diabetes self-management education, and to be monitored for diabetes complications."

While the study encompassed varying degrees of rural populations, it "relied on insurance information to identify diabetes complications," UM reports. "If people could not access medical care, that complication would not be captured. Dr. McCoy noted that this finding further underscored the barriers to care in remote areas: patients are likely having high blood sugar emergencies and heart failure but cannot get to the emergency department or hospital to have them diagnosed and treated." Study authors added that further research should investigate reasons why these disparities exist.

Prenatal drug exposure is found in thousands of babies each year; rural babies are more likely to have problems

More research is needed on prenatal drug exposure.
(Photo by Jill Sauve, Unsplash)

Amid rural hospitals and clinics ending prenatal care and closing labor and delivery units, unborn children face a quieter threat -- exposure to drugs that limit their in-utero development, can cause lower birth weights and contribute to post-birth disabilities, writes Amna Umer for The Conversation, a journalistic platform for academics. Umer is an associate professor of pediatric epidemiology at West Virginia University. 

Umer writes: "Nearly 1 in 12 newborns in the United States in 2020 – or about 300,000 infants – were exposed to alcohol, opioids, marijuana or cocaine before they were born. . . . These substances can have direct and indirect consequences on fetal development."

When it comes to drug exposure, rural unborn babies are particularly vulnerable. "This includes West Virginia, where I live, a rural Appalachian state struggling with extraordinary rates of substance use and an opioid crisis," Umer explains. "As an epidemiologist, I study the relationship between substance use during pregnancy and infant health outcomes. Our research work showed that between 2020 and 2022, prenatal substance exposure in West Virginia was nearly 50% higher, at 124 per 1,000 births, than the national rate of 80 per 1,000 births."

Poverty and ongoing regional economic stress are part of West Virginia's drug crisis, which extends to pregnant mothers, but there are other factors at play. Umer writes, "Nearly half the population lives in rural areas with limited hospitals and clinics. The geographic isolation limits access to health care and substance use treatment services. Finally, stigma and judgment within close-knit rural communities may discourage these mothers from seeking help."

The body of research on prenatal drug exposure is still growing, and depending on the substance babies were exposed to in the womb, the outcomes vary from low birth weights to withdrawal to developmental delays. Some exposure has a lasting impact on children. Umer explains, "Limited studies have shown an association between neonatal abstinence syndrome and long-term neurodevelopmental consequences that may develop as early as six months old and persist into adolescence. These include delays in learning and language skills, physical growth and motor skills, and difficulty regulating behavior and emotions."

Half of rural hospitals lose money; consultancy estimates 418 could close, citing Medicare Advantage as big issue

Map by Chartis Center for Rural Health, labeled by The Rural Blog

Rural hospitals are in more trouble than ever, and 418 of them are “vulnerable to closure,” according to a study of their finances by Chartis, a Chicago-based health-care consultancy that specializes in tracking the business of rural health. (Here's its list of top 100 rural and community hospitals.)

The Chartis Center for Rural Health says rural hospitals are entering "a startling new phase of this crisis as rural hospitals fall deeper into the red, 'care deserts' widen throughout rural communities, and the increasing penetration of Medicare Advantage could further disrupt rural hospital revenue."

The top warning signal cited in the study is that half of rural hospitals are losing money, up from 43 percent a year ago. That news is especially bad for independent rural hospitals, 55% of which are in the red, while only 42% of rural hospitals affiliated with groups are operating at a loss. "Nearly 60% of rural hospitals are now affiliated with a health system," Chartis reports.

Most people on Medicare now have Medicare Advantage, private insurance plans that get lump sums from Medicare to cover members and look for ways to attract customers while limiting claims. "Medicare Advantage now accounts for 35% of all Medicare-eligible patients in rural communities," Chartis reports, saying Advantage plans' share of rural residents has risen 48% since 2019. 

Chartis map, labeled by The Rural Blog; click to enlarge

That's a problem for rural hospitals designated as "critical access" because Medicare Advantage plans' net reimbursement to such hospitals "is often lower for similar services than that of traditional Medicare because Medicare Advantage does not follow cost-based reimbursement" as traditional Medicare does for such hospitals, Chartis reports. Insurance companies negotiate those rates with hospitals, and in many rural areas, hospitals are at a negotiating disadvantage because few insurers operate in their service areas.

Also, "Medicare Advantage may not cover all the services traditional Medicare does, including swing beds, which provide skilled nursing care for patients and are often a strong source of revenue stability for rural hospitals," Chartis notes. "Rural providers may not be equipped to efficiently navigate administrative requirements for payment introduced by Medicare Advantage, such as prior authorizations, which can lead to increased denials."

Since 2010, "167 rural hospitals have either closed or converted to a model that excludes inpatient care," Chartis says. The firm says its estimate that 418 are “vulnerable to closure” is based on "a new, expanded statistical analysis" of their finances, gleaned from cost reports they file with Medicare.

Expectant moms face OB-GYN deserts; one state is an example of the national problem

A mother holds a newborn baby.
(Photo by Katie Klingsporn, WyoFile)

Wyoming is one of many states where women and families are finding obstetric care harder to find. "More than 15% of Wyoming women had no birthing hospital within 30 minutes of home in 2022, compared to 9.7% of women nationally, a report by the March of Dimes shows," Katie Klingsporn of WyoFile reports. "Such distance from care comes with real risks. Women who live farther from delivery hospitals are more likely to experience adverse medical outcomes. . . . In rural areas of Wyoming, 22.4% of women live over 30 minutes from a birthing hospital compared to 5.2% of women living in urban areas, according to the March of Dimes."

Nestled in west central Wyoming, Fremont County is "not unique, but with one obstetric practice, one midwife and one birthing hospital serving the general population of Fremont County — a New Hampshire-sized area that's home to nearly 40,000 people — the situation here offers a window into the challenges, and consequences, of limited maternal health services," Klingsporn writes. And while Fremont County has a 24/7 delivery center in SageWest Hospital in Lander, women who labor and deliver there will most likely be treated by a traveling doctor, who is also a stranger. 

Map of towns Fremont County women travel to for
obstetric care. (Map by Eda Uzunlar,WyoFile)

Traveling in Wyoming can be both risky and expensive. It "requires money, childcare, work flexibility and other resources that not everyone has. And then there's the issue of winter travel in Wyoming, where icy storms regularly close roads and ground air ambulances," Klingsporn reports. "The OB shortage is not isolated to Fremont County. Hospitals in Rawlins and Kemmerer stopped offering delivery services in recent years. Other counties like Sublette and Weston don't have birthing facilities at all."

Jen Davis, Gov. Mark Gordon's senior policy advisor on health and human services, "said of the dearth of maternal health care, 'It's a huge problem,'" Klingsporn writes. 

While traveling longer distances to see obstetric providers can lead to poor outcomes, more pregnant women in Wyoming are having to take that risk. "The farther a woman travels for maternity care, the greater the risk of maternal morbidity and adverse infant outcomes," Klingsporn reports. 

The loss of labor and delivery care is a national problem. "In 2022, the March of Dimes reported on the problem of 'maternity care deserts' across the United States," reports Stacey Kelleher for Health eCareers. "These communities do not have birthing centers or hospitals offering obstetric care. Outside these maternity care deserts, which affect more than two million women of childbearing age, nearly seven million other women and 500,000 births are also impacted by low or no access to Ob-Gyn care in this country."

Opinion: Amid hospital closures and soaring costs, medical centers should offer affordable care, not luxuries

Some hospitals look more like 5-star hotels.
(Photo by Jared Rice, Unsplash)

An anticipated "getaway" or "a journey of a lifetime" is often tied to a vacation that offers time away from the stress of daily life. But these traveling words are now being used to rebrand disease treatments. "Spin doctors are marketing getting sick as an adventure," writes Elisabeth Rosenthal in her opinion for KFF Health News. "It's not."

Rosenthal has always enjoyed travel and, for a time, lived in Rome. Her more recent "trips" were nothing like a vacation or living abroad. "I'm told, I've been on a journey. Two journeys, actually: First, a 'traumatic brain injury journey,' experienced at Johns Hopkins Hospital after I banged my head and developed trouble with my balance and gait," she writes. "More recently, I've been a traveling companion on my husband's 'cancer journey' at Memorial Sloan Kettering in New York City."

While her care was excellent, the profoundly severe element of many illnesses "has been rebranded in American health care as a kind of adventure," Rosenthal adds. "Experts speak of stroke journeys. Hospital systems invite people on kidney transplant journeys. The language has trickled down into advertising: Take a hair loss journey or a weight loss journey (newly popular because of Wegovy and similar drugs). The heart failure journey even comes with a map."

"A map?" Rosenthal asks. You don't visit anywhere exotic during disease treatment, and none of the treatments are glamorous. She writes. "In recent years, tight budgets, staffing shortages, and burnout have hit American hospitals. At the same time, many health centers in the U.S. — including the most prestigious ones, and even some community hospitals — have morphed into seven-star hotels. New hospital buildings, such as recent projects at the University of Michigan hospital system . . . . A hospital might now boast about its views, high-thread-count sheets, or food provided by a Michelin-starred chef."

In a nation where rural hospitals face towering debts and closures, and many Americans opt to delay treatment because of cost, "Is it worth it?" Rosenthal wonders. "Room charges in many hospitals can exceed $1,000 a night. . . . A hospital's function is to diagnose and to heal at a price that sick people can afford. I dream of a no-frills Target- or Ikea-like hospital for care. . . . The best hospitals in Europe are utilitarian structures resembling urban high schools."

Rosenthal suggests: "Instead of providing free coffee and a piano in a soaring, art-filled marble lobby, how about focusing on the very basic things that health systems in the U.S. should do, but — in my experience — in many cases do not, like making it easier for patients to schedule appointments? Shortening the now lengthy wait times to see physicians who take insurance plans? Or paying for adequate staffing on nights and weekends? Or ending those two-day stays in emergency rooms when all inpatient beds are full?"

Kansas governor says state faces hospital closures and sicker residents unless it expands Medicaid

William Newton Hospital serves south-central Kansas
patients. (William Newton Hospital photo)

With rural hospitals and clinics closing at alarming rates, many states are faced with rural populations that cannot access needed medical care. Kansas Gov. Laura Kelly is taking the issue on and "dedicated this year's fall to traveling around her state and talking with constituents and community leaders about expanding Medicaid," reports Liz Carey of The Daily Yonder. "In a state where 60 rural hospitals are at risk of closing, forcing the legislature to expand Medicaid would be a lifeline, she told Carey. Her new campaign, 'Healthy Workers, Healthy Economy,' aims to help residents understand what Medicaid expansion could mean for rural hospitals, rural residents, and the state's economy."

"In 2013, the Affordable Care Act expanded Medicaid coverage to most adults with incomes up to 138% of the Federal Poverty Level, or about $41,400 a year for a family of four. To date, nine states – Alabama, Florida, Georgia, Kansas, Mississippi, Tennessee, Texas, South Carolina, and Wyoming – have not expanded Medicaid," Carey explains. "North Carolina's Governor Roy Cooper signed legislation into law that directed the state to expand Medicaid, but the implementation of that expansion has been stalled awaiting legislative action."

Numerous studies have shown that states without Medicaid expansion have rural populations with poorer health outcomes when compared to states that adopted the broader coverage. "In 2020, a look by Kaiser Family Foundation at more than 400 studies done since 2013 found that states that did expand Medicaid saw improvements in healthcare access, financial security, and health outcomes among other things," Carey reports. She told Carey: "We can only judge the impact of not expanding Medicaid by looking at the states around us that have. It's clear that Kansas has sicker populations and populations with more mental health issues."

In an event speech, Brian Barta, CEO of William Newton Hospital in Winfield, Kansas, (pop.1,726), said, "'It is estimated that Medicaid expansion will help over 150,000 Kansans and continued failure by the state legislature to support Medicaid expansion undermines the physical, emotional, and economic health for all of Kansas,'" Carey writes. "The closure of a rural hospital impacts more than just rural residents, though, Kelly said. Closed rural hospitals mean communities lose much-needed jobs and tax revenue."

Carey adds, "Kelly has noted that expanding Medicaid is her number one priority for the 2024 legislative session. While some other governors have taken action through executive order, Kelly said her hands are tied. Under the previous administration, legislation was passed that required any Medicaid expansion could only be done by the legislature. So far, she's tried five times to get that kind of legislation passed. . . . And while it's not the first time she's fought this fight, this time, she said, she's taking it to the voters."

Rural hospitals face tough choices, and no option is 'a slam dunk'

Only 15 out of 600 hospitals have converted to the Rural
Emergency designation. (Photo by Adhy Savala, Unsplash)

With many rural hospitals facing financial crises, some have opted to end inpatient stays and convert to emergency services care. In another case, a hospital has gotten creative -- turning to crowdfunding -- to keep its doors open.

In January, The Centers for Medicare and Medicaid Services offered a new payment model where federal payments to qualified hospitals would increase if centers gave up inpatient care. As of October, "Just 15 facilities have taken the federal government up on its offer, reports McKenzie Beard of The Washington Post. "That's a fraction of the more than 600 rural hospitals that the nonprofit Center for Healthcare Quality and Payment Reform estimates are at risk of closing in the near future."

The Rural Emergency Hospital designation seeks to stem hospital closures by offering different payment incentives; however, "for a rural hospital to switch to the new payment model, its state legislature must first pass legislation regulating the program," Beard writes. "Of the 15 hospitals that converted this year, all but two are located in the South. Texas and Mississippi lead the pack with five and two rural hospital conversions, respectively. At the same time, Sturgis Hospital in Michigan and South Central Kansas Medical Center in Kansas are the only facilities in the Midwest to make the switch."

Hospitals that opted to convert are already seeking legislative program changes, and the switch is not a "a slam dunk," Beard reports. Carrie Cochran-McClain, chief policy officer at the National Rural Health Association, told Beard, "It's definitely not the panacea."

Clinton County, pop. 38,000
(Wikipedia map)

Hospitals can face unexpected financial setbacks and lack additional funds to buffer losses. Bucktail Medical Center, in western Clinton County, Pennsylvania, is one of those hospitals. "First, one of its employee retention credit applications, worth up to $400,000, was delayed. That filing became mired in a bureaucratic chain of events that meant a delay of up to 14 months," reports Liz Carey of The Daily Yonder. "Next, the Pennsylvania Department of Human Services sent a notice that it had overpaid the hospital in 2018, and they needed to pay back $255,000."

In total, the hospital faces a $1.5 million shortfall. "Without some short-term funding, Tim Reeves, the hospital's administrator, said, the hospital may be forced to close," Carey writes. "The idea to put a fundraising call out on GoFundMe came from one of the hospital's board members, he said. So far, the campaign has raised just over $15,500. . . . Still, the hospital is working with its state legislators and Congressmembers to get some help."

"At 85 employees, it is the largest employer in western Clinton County. The impact of the hospital closing would be devastating for the county, Reeves said. As he works on a short-term solution, there are long-term decisions America has to make about healthcare in rural areas, he said." Reeves told Carey: "I think as a society we need to make a choice – do all Americans deserve the same level of health care? Are we okay with the disparity where you may receive a lesser quality of health care because of where you decide to live?"

Medicare Advantage plans are growing in popularity, but their payment tactics hurt smaller hospitals

Photo via Mesa View Regional Hospital

Medicare Advantage plans have become increasingly popular with seniors, but for small, rural hospitals, the plans are too risky, which can leave local plan participants unable to go to their town's hospital. "Medicare Advantage insurers are private companies that contract with the federal government to provide Medicare benefits to seniors in place of traditional Medicare," reports Sarah Jane Tribble of KFF News. "The plans have become dubious payers for many large and small hospitals, which report that the insurers are often slow to pay or don't pay."

Enrollment in private Medicare plans "has increased fourfold in rural areas since 2010. Meanwhile, more than 150 rural hospitals have closed since 2010, according to the Cecil G. Sheps Center for Health Services Research at the University of North Carolina. States such as Texas, Tennessee and Georgia have had the most closures."

The slow or no-payment tactics of Advantage plans disproportionately hurt "small, rural hospitals that Medicare has designated as 'critical access," Tribble explains. "Under the designation, government-administered Medicare pays extra to those hospitals to compensate for low patient volumes. Medicare Advantage plans, on the other hand, offer negotiated rates that hospital operators say often don't match those of traditional Medicare." 

Medical providers can face a no-win situation when rural residents enroll in Advantage plans. For example, Mesa View Regional Hospital, a rural hospital about 80 miles east of Las Vegas, has "a high percentage of patients enrolled in Medicare Advantage plans," Tribble reports. The hospital has "21 Medicare Advantage contracts with multiple insurance companies. . . . Mesa View's CEO, Kelly Adams, says he has trouble getting the plans to pay for care the hospital has provided. They are either 'slow pay or no pay, he said. . . . It would be a 'tough deal' to be forced to reject patients because they didn't have traditional Medicare."

"At Mesa View, patients must drive to Utah to find nursing homes and rehabilitation facilities covered by their Medicare Advantage plans," Tribble reports. Adams told her: "Our local nursing homes are not taking Medicare Advantage patients because they don't get paid. But if you're straight Medicare, they'd be happy to take that patient."

What is being done? "In June, a bipartisan group of Congress members, led by Sen. Sherrod Brown, D-Ohio, sent a letter urging federal agencies to do more to force Medicare Advantage insurers to pay health systems what they owe for patient care. . . . In an August response, CMS Administrator Chiquita Brooks-LaSure wrote that a final rule issued in April made 'impactful changes' to speed up care and address concerns about prior authorization — when a hospital and patient must get advance permission for care to ensure it will be covered by an insurer," Tribble reports. Brooks-LaSure noted another proposed rule that, once finalized, "could mandate that insurers provide specific reasons for denying care within seven days."