Looming Crisis in Rural Health Care

Hospitals in our state provide access to high quality care for thousands to rural Nebraskans; however, Nebraska is not immune to these national trends. Nebraska has only had one hospital close during this time period but many hospitals in rural Nebraska are struggling with low or quickly declining operating margins. The most recent data shows that thirty-nine (39) out of seventy-one 71 rural Nebraska hospitals have a 2% or less operating margin.  An addition, twenty-nine (29) rural hospitals experienced negative operating margins in 2018 with twenty-two (22) of those having a negative three percent (-3%) operating margin or worse.

Since 2010, one hundred and two (102) rural hospitals have closed their doors. As bad as that may seem, things are likely to get much worse, and soon. Currently, 46% of rural hospitals nationally operate at a loss, compared to 44% in 2018 and 40% in 2017. Due to financial strains, nearly 700 rural hospitals are financially vulnerable and at high risk of closure, representing more than one-third of rural hospitals in the U.S.

There are a number of factors converging to place downward pressure on rural hospital operating margins. These factors include federal government policies such as Sequestration and Bad Debt, health disparities (rural populations are older, sicker and less affluent), low patient volumes, the shifting nature of patient care, population migration and staff recruitment and retention.

“It’s not one or two issues, it’s a whole swatch of things rural hospitals have to confront,” said John Roberts, Executive Director of the Nebraska Rural Health Association. As a result, many hospitals across the state have had to cut costs by reducing some services, such as obstetrics, long term care or assisted living.”

“I think you’re going to start see hospitals continue to make decisions about what they can sustain based on their (patient) volumes and based on their revenue,” Roberts said. “As the things you’re making a margin on continue to evaporate, then you start looking at what services you can afford to continue.”

There is a growing sense of urgency. “When a hospital closes, you see that the community struggles,” Roberts says. “Pharmacies close, grocery stores close, companies choose not to locate to a place where their employees won’t have access to a hospital.” More is at stake, it seems, than convenient access to the services hospitals provide.

“How many more rural health hospitals need to close or cut their services for meaningful action to be taken?” Roberts said, “We all have a responsibility to take action – rural providers, community leaders and state and federal policymakers, to stop the bleeding and prevent further rural hospital closures. If we do not, millions of rural citizens will lose direct access to care nationally while local economies will suffer in those communities.”

All of this is happening during the longest uninterrupted period of economic growth in U.S. history should be added cause for concern. In other words, what may have recently looked like a slow-moving train wreck should now be accompanied by a flashing red lights and a blaring sirens.