A record number of rural hospitals closed in 2020, likely due, in part, to the COVID-19 pandemic.
Twenty rural hospitals shut their doors last year, according to the Cecil G. Sheps Center for Health Services Research at the University of North Carolina. The previous record, set in 2019, was 17 closures.
“There were tough financial headwinds for rural hospitals prior to the pandemic,” said Alan Morgan, CEO of the National Rural Health Association. “Did the pandemic exacerbate an already difficult situation? Absolutely.”
The year 2020 began typically enough for rural hospital closures, with four hospitals closing in the pre-pandemic months of January and February 2020.
RURAL HOSPITALS ARE ON THE BRINK OF COLLAPSE
Mark Holmes, director of the Cecil B. Sheps Center, said the rate of closures early in 2020 suggests that the pandemic didn’t have much of an impact.
“This is not a result of the pandemic, although it certainly didn’t help at all and probably made things a little worse,” said Holmes. “But the trend that we were on prior to the pandemic taking hold underscores the crisis facing rural hospitals nationwide.”
From 2011-2020, 133 rural hospitals closed their doors. According to a study from the Chartis Center for Rural Health, 453 of the nation’s roughly 1,800 rural hospitals are vulnerable to closure.
For years, rural hospitals have struggled with a healthcare payment system that rewards high volumes of visits and procedures. Rural hospitals have lower volumes of patients than urban and suburban ones. Rural areas also tend to have a higher percentage of patients on Medicaid and Medicare, which do not pay as well as private insurers, along with a higher percentage of uninsured patients.
While those problems undoubtedly affected closures last year, the rate of closures did increase in the early months of the pandemic. In March and April, seven rural hospitals closed.
As the pandemic worsened in March, most states ordered hospitals to discontinue elective procedures. For rural hospitals, that meant canceling a great many outpatient procedures. The Chartis Center has found that outpatient procedures account for an average of 76% of rural hospital revenue.
The accelerated pace of March and April might have worsened if not for the Coronavirus Aid, Relief, and Economic Security Act.
“Many of these hospitals have less than a month of cash on hand, and now they could be losing almost 80% of their revenue,” said Michael Topchik, national leader of the Chartis Center. “We knew we could have lost one-quarter to one-third of rural hospitals.”
The CARES Act provided $100 billion to hospitals to respond to the pandemic. It also provided Paycheck Protection Program loans and stopped a scheduled 2% cut to Medicare.
“The funding that went out with the CARES Act, it allowed me to say for the first time in nearly two decades that funding for rural hospitals was stable,” said Morgan.
No rural hospitals closed in May and June.
But more rural hospitals began closing again in July, and eight more had closed by the end of November.
That may be due to the surge in rural counties that began in late summer. Rural counties saw about 50,000 weekly COVID-19 cases in early August. By late November, that had jumped to 200,000.
By October, the percentage of adults hospitalized in rural areas who had COVID-19 reached 15% and hit 30% in November, according to the Chartis Center. That made it harder for rural hospitals to restart their outpatient procedures.
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“We never had a respite in the surge in these rural counties that allowed rural hospitals to get their feet under them,” said Morgan.
