A Narrative About Virginia’s Rural Hospitals that Obscures the Facts

by James C. Sherlock

Becker’s Healthcare, a widely read medical news organization, published a story on Friday, “892 hospitals at risk of closure, state by state.” Rural hospitals were the topic.

It cited as its source a report from a non-profit named The Center for Healthcare Quality and Payment Reform (CHQPR), which presents itself as “a national policy center that facilitates improvements in healthcare payment and delivery systems.”

The CHQPR report Rural Hospitals at Risk of Closing claims that twelve of Virginia’s “27″ rural hospitals are at immediate risk of closing. It certainly engaged my interest.

Another CHQPR report, The Crisis in Rural Health Care, has an interactive map where the twelve perhaps can be found.

But the sources of both reports are a mystery, at least to me.

  • First it must be noted that the Virginia Department of Health lists only 20 rural hospitals in the state.
  • Only five of them lost money in 2020 (see the column “Revenue and Gains in Excess of Expenses and Losses”).
  • Four of those are owned by large and profitable health systems that use them to feed more profitable cases to other system hospitals.

It is dangerous to the cause of improving rural healthcare to create “reports” like this.

From the CHQPR story, the rural hospitals “at immediate risk of closing” have:

• Persistent Financial Losses: The hospitals had a cumulative negative total margin over the most recent 3-year period for which financial data were available; and
• Low or Non-Existent Financial Reserves: The hospitals either (a) had total liabilities exceeding all assets other than buildings and equipment, or (b) had assets greater than liabilities, but only by enough to sustain continued losses for at most 2 years.

I checked the ownership and financials of Virginia’s 20. Only five of them were unprofitable in 2020. The money losers were:

  • Buchanan General Hospital
  • Carilion Tazewell Community Hospital
  • Dickenson Community Hospital – Ballad Health
  • LewisGale Hospital Pulaski – HCA
  • Bon Secours Rappahannock General Hospital

The biggest problem with the story is that it reports on the financials of each hospital as if it were a stand-alone entity. Only one is.

Carillion, Ballad, HCA and Bon Secours are each very profitable statewide and were in “the most recent three-year period.”  Their total assets certainly exceed their liabilities.

In fact, the money-losing rural hospitals in those systems serve as feeder facilities to larger hospitals in the same system for more complex, high-margin care.

It is stories like this from agenda-driven sources that distract from the very real problems of rural healthcare:

  • Increased inflation will hit all of healthcare. Medicare and Medicaid payment models need quickly to keep up, especially in payments to rural healthcare providers. With 3% inflation, annual adjustments were workable at the receiving end. At 10% inflation, that will not work.
  • I am not aware of a state process to raise payments when the General Assembly is in recess. There may not be one. Perhaps Steve Haner can address that.
  • Another major issue is the scarcity of healthcare professionals that is chronic in rural Virginia.

There are lots of things to talk about without creating a scary narrative out of thin air.