The blog of the Urban Institute
April 6, 2020

To Weather COVID-19, Rural Hospitals Might Need More Support

The recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act includes several provisions that can help rural hospitals, but some hospitals may need additional support to care for their communities through the pandemic.

Although urban hospitals have been hit the hardest, federal policymakers should also consider the specific needs of rural hospitals in responding to the pandemic in their communities. From serving higher-risk populations to struggling with limited funding, rural hospitals face serious challenges that may require additional federal action to address. To improve access to and quality of care for rural communities, state and federal policymakers should consider supplying medical equipment and other assistance as the pandemic spreads to these areas.

Despite available beds, rural hospitals face many challenges

In 2018, the US on average had approximately 2.2 hospital beds per 1,000 people (excluding federal and specialty hospitals), with capacity varying significantly across geographic areas. In general, rural and smaller hospitals had significantly higher rates of available beds than urban and larger hospitals.

Hospitals in rural counties had more capacity than those in urban counties, and several urban counties hit hard by COVID-19, such as King County, Washington, and Westchester County, New York, were at the low end of the capacity spectrum.

Rural hospitals may have lower occupancy rates and more available beds relative to population, but the lack of equipment, technology, and qualified staff in rural areas may limit their ability to treat very ill COVID-19 patients. A recent Kaiser Health News analysis shows more than half of US counties—mostly in rural areas—have no intensive care unit (ICU) beds.

One study found that small, isolated hospitals were less likely to have ICUs, electronic health records, and ability to perform complex procedures. These hospitals have fewer specialists, like cardiologists and pulmonologists, and higher mortality for conditions like pneumonia, which can be a complication of COVID-19.

General health care workforce shortages in rural areas are also are also well documented (PDF), further compounding this supply constraint.

Although the spread of COVID-19 is likely to be slower in rural areas with low population density, these areas also have high shares of elderly residents susceptible to developing severe symptoms. Very ill patients in rural areas may need to be transferred to distant facilities to receive intensive care, or they may receive lower-quality care and have limited access to technology.

Rural hospitals also face significant, immediate financial challenges that could hinder their ability to effectively respond to the pandemic. Many depend on elective surgeries and outpatient services for revenue, which are now being canceled and postponed to free up beds and resources for COVID-19 patients. One Michigan hospital that typically collects approximately $5 million in revenue per month reported making only $3 million in February.

Larger hospital systems may have the resources to absorb such losses, but rural hospitals face a much higher risk of closing and may not be able to withstand these short-term losses—potentially forcing many to close just as need for beds is increasing dramatically, leaving vulnerable communities with less access to care.

These financial challenges are exacerbated by long-term demographic and economic factors that have strained rural hospitals and limited their ability to provide care and respond to crises. Compared with urban areas, rural communities tend to have higher shares of elderly residents, lower median incomes, and shrinking populations. Economic depression and losses of major employers (PDF) also mean that fewer rural residents had employer-sponsored insurance even before the pandemic. Compared with urban hospitals, hospitals in these areas treat higher shares of patients who are uninsured or covered by Medicare or Medicaid, which offer much lower reimbursement rates than private insurance.

These issues have produced enormous financial strain, causing many rural hospitals to operate on tight margins or close altogether. According to the Chartis Center for Rural Health, almost half of all rural hospitals operate at a loss, and more than 120 have closed since 2010. And the rate of closures has been accelerating—19 closed in 2019, the most in any one year in the past decade. More than 450 more hospitals are currently vulnerable to closure based on financial and operational performance measures.

The pandemic will likely worsen the financial circumstances of the remaining rural hospitals. Widespread increases in unemployment will further decrease private insurance coverage. In states that have not expanded Medicaid eligibility, increases in the uninsured and the need for uncompensated care could skyrocket.

Additional hospital closures resulting from financial stresses will compromise access to care not only for those with COVID-19 but also for rural residents with a broad range of medical needs.

What policies could help rural hospitals better respond to the pandemic?

The CARES Act provides more than $100 billion in funding for hospitals and health systems to reimburse expenses and lost revenues attributable to COVID-19, includes new loan opportunities for small businesses, increases Medicare provider payment rates for patients with COVID-19, expands options for accelerated payments, and delays $4 billion in cuts to Medicaid Disproportionate Share Hospital payments. Although these provisions will provide financial relief for rural providers, additional actions might be necessary.

Both urban and rural hospitals will likely face capacity constraints as COVID-19 spreads. At the individual hospital level, administrators can implement various evidence-based strategies to create surge capacity, such as using a 24/7 operational system, managing patient flow, utilizing extra spaces, such as hallways and conference rooms, and transferring equipment to essential units.

At the federal level, policymakers could distribute equipment and aid to provide rural hospitals with the necessary equipment to convert regular beds to ICU beds, as is being done in some states. Military aid could also be used to build more facilities and beds and distribute equipment, such as ventilators.

Although the Federal Emergency Management Agency has delivered ventilators to hard-hit New York hospitals, there has not yet been a coordinated federal distribution effort. If a federal distribution strategy is implemented, policymakers should consider allocating resources to rural hospitals to improve their capacity to care for severely ill patients. Federal and state resources could also be allotted for transporting complex cases to better equipped but more distant hospitals.

Hospital capacity everywhere is likely to become strained as COVID-19 spreads, but rural hospitals face a combination of unique challenges that leave them financially vulnerable. Urban hospitals have so far been the hardest hit, but policymakers should consider the needs of rural hospitals and target assistance to keep them open and equipped to serve their communities through this crisis.

RN Jen Lingo walks a resident of the assisted living center in Dayton General Hospital back to her room. Dayton, a small town in rural southeast Washington, has an aging population, had its first positive test for coronavirus and is waiting on results of more tests. (Photo by Nick Otto for the Washington Post)

 

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