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1-in-5 Rural Hospitals at High Risk of Closing, Study Finds
One-in-five U.S. rural hospitals are at a high risk of closing unless their financial situation improves, according to a new analysis by global consulting firm Navigant. The study, which reviewed 2,000 rural hospitals nationwide, also shows that 64% of these at-risk facilities are considered essential to the health and economic well-being of their communities.
“Our analysis shines a new light on a rural hospital crisis that must be addressed and could significantly worsen with any downturn in the economy,” said co-author David Mosley, managing director at Navigant. “Local, state, and federal politicians, as well as health system administrators, need to act.”
Navigant’s analysis, which examined the financial viability and community essentiality of rural hospitals, warned that 21% are at high risk of closing based on their total operating margin, days cash on hand, and debt-to-capitalization ratio. This equates to 430 hospitals across 43 states that employ 150,000 people.
In 31 states, at least half of these financially-distressed rural hospitals are considered essential to the community. Southern and midwestern states, including Mississippi, Alabama, Kansas, Georgia, and Minnesota would be impacted the most, according to the publicly-available data.
Navigant’s study blamed multiple factors for the crisis facing rural hospitals, including low rural population growth, payer mix degradation, excess hospital capacity due to declining inpatient care, and an inability for hospitals to leverage technology due to a lack of capital.
One solution for troubled rural hospitals, according to the study, is to collaborate with academic and regional health systems. Partnership areas include telehealth, revenue cycle, human capital, electronic health record use, physician training, and clinical optimization.
“Collaborating with academic and large health systems allows rural hospitals to leverage the resources of these better-funded peers, and develop a hub and spoke network of clinical care that augments rural services,” said Navigant managing director and co-author Daniel DeBehnke, MD, MBA, a former academic health system CEO.
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