Can We Afford to Let Rural Hospitals Die?

Pioneer Community Hospital in Patrick county before it closed.

By Beth O’Connor

In the January 24th edition of Bacon’s Rebellion, author James A. Bacon poses the question; “Are Broke Rural Hospitals Worth Saving?” He acknowledges that many of Virginia’s rural hospitals are in trouble, but wonders if it makes financial sense to let them die.

The problem with his question is that he is only considering the issue in terms of healthcare dollars and outcomes. The reality is that a small rural hospital means much more to the local community and taxpayers than just a place to go when you have a heart attack.

The National Rural Health Association (NRHA) has published extensive information regarding the distress of rural hospitals and the importance of those facilities to small towns across the country. Since 2010, seventy-nine rural hospitals have closed. 673 additional facilities are vulnerable and could close, representing more than one-third of rural hospitals in the U.S. The rate of closures in rural areas is five times higher in 2016 compared to rates in 2010.

NRHA notes that losing access to healthcare is only one of the negative outcomes.  When a rural hospital closes, the rural economy suffers:

  • In rural America, the hospital is often one of the largest employers in the community. Healthcare in rural areas can represent up to 20 percent of the community’s employment and income.
  • The average critical access hospital — the hospital in Patrick County alluded to in Mr. Bacon’s column was a CAH facility — creates 170 jobs and generates $7.1 million in salaries, wages, and benefits annually.
  • The recession in rural America continues, with 90 percent of all job growth since 2008 occurring in metropolitan areas. If a hospital closes in a rural community, health providers relocate, and the town withers.
  • If a rural provider is forced to close, the community erodes.

That’s right, if a hospital dies the whole town dies. Patrick’s closure is recent, but a quick look at Lee County predicts the future for Patrick. Lee Regional Medical Center closed in 2013; it supported 190 full time equivalent positions.  These were not low-paying, entry-level jobs; these were doctors, nurses, anesthesiologists, therapists. The hospital had been the fourth largest employer in the county; it pumped $11.5 million in labor costs into the local economy every year.

Once those jobs left, other jobs followed. Local clinics as well as ancillary services such as food service and cleaning services struggle without a hospital serving as an anchor. After the hospital closed, the community’s only day care center closed too. Virginia’s elected officials have spent untold hours trying to lure businesses to the Commonwealth, but a town without a stable healthcare system will not land the next business enterprise.

Additionally, when a rural hospital closes the taxpayer suffers:

  • Rural hospitals provide cost-effective primary care. It is 2.5 percent less expensive to provide identical Medicare services in a rural setting than in an urban or suburban setting. The focus on primary care, as opposed to specialty care, saves Medicare $1.5 billion/year. Quality performance measurements in rural areas are on par with if not superior to urban facilities.
  • Critical Access Hospitals represent nearly 30 percent of acute care hospitals but receive less than 5 percent of total Federal Medicare payments.

A ‘bigger is better’ mindset suggests that sending patients to Martinsville or Roanoke would be more efficient and have better outcomes, but the data suggests otherwise.  The healthcare analytics group iVantage has documented that hospitals in rural areas have significantly higher ratings on Hospital Consumer Assessment of Healthcare Providers than those located in urban areas.  This includes:

  • Lower risk-adjusted rates of potential safety-related events.
  • Significantly lower adverse event rates than urban counterparts.
  • Significantly lower rates of post-op hip fracture, hemorrhage, & hematoma.

Mr. Bacon refers to Medicaid expansion as “blunderbuss legislation.” I call it a lifeline. Since 2010, seventy-nine hospitals in rural America have closed. Two-thirds of those were in states that have refused to expand Medicaid, including two in Virginia.

By not expanding Medicaid, Virginia loses $142 million in federal funding every month. Since 2014, the Commonwealth has forfeited over $10 billion in federal funds — our own tax dollars that should have been used to help uninsured adults, hospitals, and businesses.

Others may be content to allow their tax dollars to go to Washington, D.C. and stay there.  I am not.  Virginia taxes should be spent on Virginia people and Virginia healthcare providers.

Because the question is not, “Are Broke Rural Hospitals Worth Saving?”, the question is, “Can We Afford to Let Rural Hospitals Die?”

Beth O’Connor is executive director of the Virginia Rural Health Association.

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21 responses to “Can We Afford to Let Rural Hospitals Die?”

  1. LarrytheG Avatar

    Congrats to Beth O’Connor for telling it as it is.

    If Jim Bacon and his Conservative birds of feather actually had a real alternative to expanding MedicAid and funding rural hospitals..and helping the opioid crisis, it might be a worthwhile debate.

    but that have nothing.

    what they are saying is “no”… and “some day we might figure out something”.

    that’s not an acceptable alternative – morally nor fiscally…

    of all the idiotic things the GOP GA does in the name of “economic development” (like pump storage or coalfield expressways” as well as refusing to get back tax dollars from Virginians, what would be better than medical facilities – economic development + health care?

    This is the state of Conservatism these days.. whether it’s MedicAid, or Immigration, or even infrastructure funding. It’s tax cuts funded by deficit spending… and little else.

  2. Steve Haner Avatar
    Steve Haner

    Is it established that adding more people to Medicaid eligibility will bring these small hospitals back to economic health? Do they have the same load of uncompensated care as the larger urban hospitals? The economic and health value of a stable hospital to a community is undisputed, but if the patients are not there or the overhead per patient is too high, the outlook is still grim. And losing 79 hospitals spread among 50 states in a decade is a meaningless stat because I bet even more facilities and beds have opened in other more populous locations. Expanding Medicaid may not change that trend.

    The reason to expand Medicaid eligibility is because of what it will do for the health of patients, lower income working people with no decent option that they can afford. I just sent off my annual deposit to the HSA, a check the size of which many of these families never write, and the folks in Congress made sure I will still get a sweet subsidy back from them at tax time. I get that four figure tax break but we cannot afford to give these folks access to a primary care doc? Isn’t the real problem with Medicaid the nursing home care for the elderly, many of whom are only “indigent” after transferring assets?

  3. LarrytheG Avatar

    seems counter intuitive.. but:

    Rural hospitals rely on Medicaid expansion to stay open, study shows
    Health Jan 9, 2018 11:13 AM EST

    In recent years Obamacare’s Medicaid expansion has created a financial fault line in American health care. Hospitals in states that enacted the expansion got a wave of newly insured patients, while those in states that rejected it were left with large numbers of uninsured individuals.

    A new study released Monday reports a crucial consequence of that divide: Nonexpansion states have suffered a significant increase in hospital closures. States that expanded benefits, on the other hand, saw their rate of closures decline.

    on basic MedicAid a third goes to the elderly in nursing homes.

  4. TooManyTaxes Avatar

    If we expand Medicaid, let’s do it on a county-by-county or city-by-city basis. When the federal subsidy ends, each local government must pay for its share of the expansion. State money goes to each locality on per-capita basis. If the locality’s share of Medicaid patients is larger, the difference comes from local taxes.

    And any trade association like the Virginia Rural Health Association that pays for lobbying should be taxed as a for-profit business.

    1. Steve Haner Avatar
      Steve Haner

      Two years ago it was a reasonable concern that the federal portion would disappear or drop. Now when a GOP President, House and Senate have failed to change that portion of the previous administration’s program, there is zero reason to expect this would be the first major federal entitlement program to disappear. It is here for a while – at least until Boomergeddon.

      FYI TMT, in effect lobbying is taxed. Businesses may not deduct lobbying costs as a business expense. The portion of an association membership that is dedicated to lobbying is also not a deductible business expense. And if an association has income (investments, side businesses) guess what – that income is taxed.

  5. LarrytheG Avatar

    The problem with TMT’s idea is that he’s essentially saying that all folks who need health care or other help in a county -that county has to pay for it.

    We’d also be cutting State help on education, public safety, roads, electricity, phones, etc… just let them twist and turn.. and become de-facto 3rd world entities ….

    We do not leave the rural counties to turn into 3rd world type counties.

    No one who ran for office and honestly advocated that view would get elected.

    and the problem with the Medicaid Expansion and rural hospitals is this:

    The law that provided for the Medicaid Expansion – also, at the same time, did away with the disproportionate share hospital (DSH) payments that had helped rural hospitals with large numbers of charity cases stay open.

    The States that did not take the expansion – did not get the DSH money restored.

    The states that turned down the MedicAid Expansion.. essentially voted to imperil their rural (and city) hospitals with high levels of charity cases.

    But sounds like if TMT were in charge – there would be no Federal Medicaid, Medicare, CHIPs, etc… it would be all up to each individual county to take care of their residents health care.

    I realize there are those who believe that but I also know that anyone who ran for office and was honest about that kind of view , would never be elected.

    Not withstanding, that DOES seem to be the view of most of the Va GOP in both Congress and the GA… they just won’t come right out and admit it.

  6. TooManyTaxes Avatar

    My point is I’m sick and tired of sending tax dollars from Fairfax County to subsidize much of the rest of the state that has dirt-cheap real estate taxes when Fairfax County’s economy is pretty flat and we have tens of thousands of poor people living right here. Divide any state Medicaid reimbursement by the population of each city and county. That’s what every locality gets. If it costs more, raise local taxes or cut local services.

    Steve – I realize businesses cannot deduct lobbying expenses, including those paid in association dues. I’d go further. Any tax exempt entity that “purchases” lobbying services, either outside or in-house, loses its tax exempt status. The choice will be an association that does not lobby period – or a taxable entity.

    1. LarrytheG Avatar

      @TMT – economically distressed counties have little capacity to tax and their services are already minimal.

      That’s exactly why there is a LCI index for k-12 schools.


      and it’s pretty straight forward and hard to “scam” :

      The Composite Index determines a school division’s ability to pay education costs fundamental to the commonwealth’s Standards of Quality (SOQ). The Composite Index is calculated using three indicators of a locality’s ability-to-pay:

      True value of real property (weighted 50 percent)
      Adjusted gross income (weighted 40 percent)
      Taxable retail sales (weighted 10 percent)

      tell me how the rural counties can “scam” this.. so they get more so they can reduce the tax rate from a higher level of where you think it should be?

      these same rural counties get extra dollars for courts, deputies, EMS, etc… on the same basis of “ability to pay”.

      this is fundamental to the concept of a “State”. It’s the same with all 50 states where the poorer counties are subsidized by the richer counties to a minimal level to support schools , roads and public safety.

      I just don’t see how Va counties can “scam” the calculations that determine local ability to pay.

      1. TooManyTaxes Avatar

        Larry – the LCI is seriously flawed because it does not consider the cost of living/housing in an area. There are many places in Virginia where one can get a very high quality, spacious house for $250 K. See what you get for $250 K in Fairfax County.

        For true equity, the state should require comparable houses to be weighted the same. Let’s say, a four bedroom, two bath, finished basement, two car garage built in 1982 is worth $225 K in a rural part of Virginia. But the same house in Fairfax County costs $800 K. For purposes of the LCI, both houses should be weighted the same. Either the state imputes $575 K to the rural locality or Fairfax County’s taxable real estate value should go down by $575 K. Then, we’d have apples to apples.

        Similarly, personal income should be adjusted. Let’s say an insurance adjuster with five years’ experience makes $30 K in rural Virginia, but the same job in Fairfax County pays $50 K due to the higher cost of living. The two jobs should be weighted equally and adjustments to gross income be made accordingly.

        After making these equitable adjustments, then apply the LCI. I suspect Fairfax County would still wind up sending more state tax dollars for education to rural Virginia. And I’m OK with that so long as we compare apples to apples. Contrary to your analysis, the LEC is a scam.

        Here’s where I disagree with DJR. He blames rural legislators for picking our pocket. I blame our local legislators for not gumming up the works in Richmond until fair adjustments are made. I blame our supervisors for not suing the state. And I blame the moronic Fairfax County voters for not forcing our legislators and supervisors from taking action.

        1. djrippert Avatar

          I don’t blame the rural legislators for picking our pockets. I do blame them for continually rambling on about rural communities’ self-sufficiency when those communities have become recipients of an ocean of unearned transfer payments. How the supposedly conservative Republican rural politicians can mock “welfare mothers” while living their lives with their palms upturned awaiting yet more handouts is beyond me. Virginia’s rural politicians are frauds who work in their constituents’ best interests. Virginia’s Northern Virginia legislators are frauds who work against their constituents’ best interests.

          There is nothing in the US Constitution or the Virginia Constitution that guarantees a person the right to live wherever they choose while being subsidized by others. Every day illegal immigrants come to Northern Virginia from other countries. They have little education and don’t speak understandable English. By hook or by crook they get jobs and start to make some money. Many (most?) eventually develop at least passable English and build a decent life for themselves and their families. There are plenty of jobs and plenty of opportunity in Richmond and NoVa. Nothing (and I do mean nothing) prevents people from relocating from rural Virginia to Richmond, NoVa, Tidewater, etc. Why is it my responsibility to guarantee people’s imaginary right to live wherever they please taking money from those of us who go where we have to go and live where we have to live in order to earn a living?

          1. LarrytheG Avatar

            re: ” There is nothing in the US Constitution or the Virginia Constitution that guarantees a person the right to live wherever they choose while being subsidized by others. ”

            as a matter of fact the Constitution does say that – about K-12.

            and Virginia typically supplements things like law enforcement also..

            AND we do Economic Development for the rural -as a matter of policy and my point on that is – that subsidizing medical care as economic development is a lot more effective than most all of the other hair-brained and costly efforts…

            why not kill two birds with one stone… subsidize but do it with something that actually works – and at the same time – provide better access to health care -which will reduce the Medicaid entitlement costs… by catching disease earlier and managing it as a treatable condition rather than do nothing until it turns catastrophic and costs hundreds of thousands of dollars – in a country WITH a hospital.. putting an even charity care burden on those hospitals?

            It makes no sense to deny health care to folks unless you’re going to do it consistently and let them die of what we refused to treat them for earlier… just don’t pay for the last ditch heroic efforts to save them right before they die.. let them die much earlier.. and deny them not only the primary care but the emergency care.

        2. LarrytheG Avatar

          You want cost-of-living like the Feds do for wages, right?

          that’s a different deal than the rural localities gaming the system or capping how much they get for Medicaid and making them pay the rest from local taxation… when the value of the houses would be even lower with your plan.

          I’m not sure your idea of just a cost of living changes a whole lot..

          the idea of capping their medicare.. is a separate thing and it does impact.

  7. TooManyTaxes Avatar

    “Virginia’s rural politicians are frauds who work in their constituents’ best interests. Virginia’s Northern Virginia legislators are frauds who work against their constituents’ best interests.”

    A very reasonable characterization. Personally, I’d like my legislators to work in their constituents’ best interests..

  8. LarrytheG Avatar

    My bet is that a majority of NoVa voters would want “their” representatives to vote to expand MedicAid and to ensure that people in rural Virginia have access to health care and hospitals.

    So – in keeping with your expectations – about your “best interests” would you also agree there are many others – perhaps a majority that also want their legislators to work in the best interests of ALL Virginians ?

    My bet is if you actually put this to a Vote in Virginia – like has been done in some other states – a majority would, in fact, vote in favor of the expansion –
    in spite of the elected GOP reps.

    my point is the GOP in Va is probably NOT representing the wishes of their constituents – and that may well be the reason why Northam won the election.

    Right now, the GOP in Va is totally hypocritical about taking money from the Feds because they say it may go away …so they won’t take it.

    Try that idea out in NoVa and Hampton… or with Highway money or regular Medicaid which IS voluntary or Federal money for K-12. ANY of THAT ..COULD go away also, yet they do take it.

    1. djrippert Avatar

      If The Thundering Herd of Corruption in Richmond ever provided a transparent analysis of where the state’s taxes are raised and where the state’s money is spent I think a lot of Northern Virginians (and Richmonders too) would have second thoughts about funding any more transfer payments.

      I still like the idea of letting each locality make its own decision on Medicaid expansion. As the left has repeated hundreds of times it’s Federal money (by and large) so the locality wouldn’t have to pay much of the expansion. However, the locality would be liable for either rolling it back or funding it locally when Federal funds dry up.

      Medicaid expansion is a trap. The Federal funding will end and everybody knows that social giveaways are almost never rescinded. The left has spent the last 90 years making sure that a large part of their base is addicted to government handouts. Medicaid expansion is just one more example. The temporary use of Federal funds is just a trick to get states to implement the latest giveaway. Having said all that, I’d still be open to an honest-to-goodness discussion of whether the working poor in Virginia need more help than they are getting. I just don’t like the Federal welfare pushers’ trick of giving away the first few hits of crack (i.e. Medicaid expansion) to create a dependency that will cost plenty later.

      1. LarrytheG Avatar

        re: ” Medicaid expansion is a trap. The Federal funding will end and everybody knows that social giveaways are almost never rescinded. ”

        you could make the SAME statement about Fed highway money, or DOD defense money/sequestration, or Fed “title” funds for education, etc.

        use one standard.. take the money – and if it goes away – the benefits go away with it.

        this happens all the time right now with standard Medicaid.

        and in the end – if the Feds cut disproportionate share money that is what keeps rural hospitals open.. – they did that – and now the ball IS in our court about what to do about it.

        And CLEARLY those who characterize themselves as NOT “the left” are apparently fine with those hospitals closing and people in rural areas in desperate economic circumstances.. being responsible for themselves and if they die .. tough cookies.

        If you right now take the standard MedicAid money which is totally voluntary and totally dependent on Fed money.. and you’d cut benefits if that money reduces.. then according to DJ… we should opt out of standard Medicaid also because it’s a “trap”.

        what load of fetid BS! take a position -yes – but at least be consistent with it!!!!

  9. Peter Galuszka Avatar
    Peter Galuszka

    Kudos to Beth O’Connor!

    One can’t overcome the bias on these posts that rural people do not deserve the same health care available in richer urban areas. I have seen it for years in my childhood where I lived in rural West Virginia and rural North Carolina where my father was a doctor.

    Hospital closings can mean a road trip of 100 miles for help. They can send a helicopter but I guess that’s too expensive and could be available for “concierge” clients.

    Meanwhile, here’s a link on a story on Trump and Obamacare I did for Style Weekly last week. One illness might have required not just road trips but moving as insurers ditch areas wholesale.

    1. Reed Fawell 3rd Avatar
      Reed Fawell 3rd

      I agree with you Peter. It’s a pretty sad and inexcusable day when the richest nation on earth can afford community hospitals. And where it’s deemed “inefficient” to allow people in a community to care for those neighbors sick in their own community. What kind of a society acts like this? Surely, a bad one, and sick too.

    2. Reed Fawell 3rd Avatar
      Reed Fawell 3rd

      Here is an example of a sick society with sick institutions.

      Our burgeoning system of health care that closes down community hospitals that are politically neutered to better serve many highly privileged and politically connected and powerful elites, and thus kill off whole ecosystems of health care givers in more rural and less connected communities that desperately need more, not less, health care close by.

      Was this how and where so much money came from that was diverted into UVA’s Strategic Investment Fund? Was it skimmed off the top of from over payments for medical services charged to patients at UVA hospital?

      Recall how UVA hospital was said to be in such desperate shape financial around 2011, the time of the Sullivan firing, yet somehow managed its incredible conversion into a money making dynamo spinning out of nowhere staggering sums of money as if by magic. Recall too how that conjuring act seem to sprout into existence not long after a former John’s Hopkins medical financial expert joined the UVA team as a board member as I recall.

      Perhaps IZZO may be able to throw more light on how this might happen. Including perhaps how Inova and its ilk suddenly came up from out of nowhere to dominate its scene. What kind of swamp creature are these that can gobble up whole public industries so quickly? While other hospitals without political power or the costly expertise needed to manipulate flawed and corrupt systems of payment, die off like dinosaurs in the age of meteor strikes.

  10. LarrytheG Avatar

    One of the fundamental issues is – are we going to treat all people -equitably – for fundamental things like access to education and health care?

    Clearly – we have folks who fancy themselves as “conservatives” who favor cutting those rural counties lose and to their own devices.. no more “help” from the more prosperous regions of the state.

    Ironic that these sentiments are coming from the most liberal region in Virginia!!!!

    I guess even liberal areas have their conservatives, eh?

    I’m pretty sure if you put this to a vote – the vast majority in NoVa would support Medicaid Expansion.. and it would likely pass in the state as a whole.. as the number 1 issue stated in the exit polls at the last election where Northam won – was health care.

    and the real IRONY here is that the rural folks vote for the guys that deny the Medicaid Expansion that would help their own rural areas with access to health care and programs for the opioid problem which is rampant in those same rural regions.

    they vote for guys that won’t fund programs for the opioid problem!!!

  11. LarrytheG Avatar

    re: ” While other hospitals without political power or the costly expertise needed to manipulate flawed and corrupt systems of payment, die off like dinosaurs in the age of meteor strikes.”

    I think for the better off regions economically – hospitals have a LOT of customers with insurance and a lot less charitable cases as a financial burden.

    In addition urban hospitals sell a lot of discretionary services that people can afford to pay for even if their insurance does not.

    Finally – Basic Medicare pays 80%. The other 20 belongs to you unless you buy a supplementary policy “Medicare Advantage”. Folks in rural areas don’t have that extra money – so when they have a condition that is going to be reimbursed by Medicare .. those folks ends up with 20% of the bill.. and
    the rural hospitals lose money even on Medicare.. because the 20% is not paid.

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