Archive for May 1, 2017

The Rural Conundrum

abandoned hospital

Photo by Gentleman of Decay

How do we preserve services in sparsely populated areas where there isn’t enough business to keep some providers in town?

According to Becker’s Healthcare Review, 80 rural hospitals nationally have closed since the beginning of 2010, with more in trouble currently.  The combination of aging populations, poor payer mixes, and declining reimbursements have made this a tough decade for rural hospitals.

An example of this trend is St. Andrews Hospital in Boothbay Harbor, Maine.  Facing declining volumes and multimillion dollar losses over the preceding decade, St. Andrews’ parent, MaineHealth, made the decision in 2013 to remove the inpatient beds from the facility. They referred the inpatient volume there to another hospital in the next town, Miles, about 30 minutes away.  Outpatient services like the emergency room, imaging, lab, and physical therapy remained.

But before its acquisition, SAH was a local nonprofit, supported by community donations and volunteer efforts.  Many residents had come to depend on its proximity, and protested vehemently over its conversion to an outpatient only facility.  Where were the fruits of all their efforts to maintain the hospital for over a century, they asked?

This scenario is being repeated all over America with increasing frequency.  Here in Colorado, there is a bill in our legislature that attempts to shore up funding for some of these rural hospitals.  The Colorado Hospital Association has estimated that up to ten rural hospitals are at risk of closure or loss of services if they can’t find additional funding.

How did this happen?

Many of these hospitals have been sustained by a status called Critical Access Hospital designation.  Congress created this status as part of the Balanced Budget Act of 1997, and it increased Federal reimbursement for these facilities.  This was done at a time when the high cost of running hospitals was forcing closures much like we are seeing now.

But some trends in medicine are placing even more strain on these facilities.  While it can be different in different places and at different times, overall there is a steadily decline in hospital days used per thousand people in the country, and has been since the 1980s.  This makes sense, as more and more things can be done in the outpatient setting and even in people’s homes.  The need for hospital facilities and their expensive brick and mortar is gradually declining.

Another trend is that as medicine has progressed, we are able to do more and more miraculous things, like cure Hepatitis C outright.  The catch?  A course of the appropriate antiviral agents is in $50,000-100,000.  This is part of why medical services costs are increasing at a rate faster than general inflation.  But in a stable or shrinking small town, the revenue base to support a hospital or health care in general is also stable or shrinking.  Thus, you have only a few choices:

  1. take up more and more of the available money in the town,
  2. find someone outside of town to subsidize the growth in services (like state or federal governments),
  3. make the services cheaper, or
  4. cut services altogether.

It appears that we are exhausting options one and two.  The only things left are options three and four, making services cheaper or cutting services.  While it isn’t any small town’s first choice, finding a cheaper way to deliver the same care may be the most feasible of the alternatives.  This may involve telemedicine to larger population centers.  Telemedicine can provide a population base large enough to justify the super-specialization we see in medicine these days.

For example, there are studies that suggest it takes about 100,000 people to have enough business to support an endocrinologist.  That rules out all but about ten Colorado municipalities, and seven of those are part of the Denver metroplex.  What about everybody else?  If a town can only supply half the number of patients needed, then either those visits have to be twice as expensive, or the endocrinologist has to take in half the money, which isn’t sustainable, since that won’t even cover her overhead.  Telemedicine creates the opportunity to overcome distances so that a specialist can have enough patients to make her business run.

We will no doubt see further innovations develop as long as we remain out of money to spend more on health care.  Already there is a trend toward “minihospitals”, smaller facilities of eight or ten beds in some metropolitan areas.  These facilities take care of common ailments like pneumonia, whereas patients with more complicated conditions go to a regional center.  The same kind of facility might work in rural areas; indeed, the ones that survive might downsize into exactly this kind of arrangement.  But one thing seems clear: our current supply of rural hospital beds isn’t sustainable with current payment mechanisms.  We will have to pay more for them collectively, make them cheaper, or lose them altogether.


May 1, 2017 at 6:14 AM Leave a comment


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