The NCSL Blog


By Mark Wolf

Phoenix—America’s rural hospitals are ailing; underpaid and squeezed by a population that is older, poorer, less insured and sicker than the nation at large.

And they're closing at a rate that alarms health officials, who are witnessing the emptying of the health infrastructure for a wide swath of rural America.

 Rural hospital closures (118 since 2010, including 17 this year alone) are escalating, panelists told a session on “Health Care Access in Rural America” during NCSL’s Capitol Forum.

The closures contribute to a growing lack of health care coverage in rural America, said Dr. Dan Derksen, a family physician, rural health care expert and associate vice president for health equity, outreach and interprofessional activities at the University of Arizona.

“Once a critical access hospital (25 beds with a 24/7 emergency department and at least 35 miles from another facility) closes, they almost never come back,” he said.

Before Arizona expanded Medicaid under the Affordable Care Act, it ranked in the bottom five states for uninsured residents at 19%. Last year, the uninsured rate was 10.9%.

“We almost halved it but that’s still unacceptably high; 750,000 people don’t have ready access to care because they can’t get coverage,” Derksen said. “Half of those would be eligible for Medicaid or marketplace subsidy, but for a host of reasons, a significant portion doesn’t take advantage of it.

“Medicaid expansion stabilized the rural health situation. Administrators don’t like what Medicaid pays but it beats trying to get money out of folks who don’t have it.”

Legislation passed last year in Arizona will provide more than $18 million for Medicaid Graduate Medical Education (with a $10 million federal match), expanding medical students in primary care and tuition remission, rural broadband, rural prenatal telemedicine equipment and state loan repayment.

“We need to move the training pipeline closer to the area of need,” he said, citing the need for more residencies in rural areas. “The more likely you are to get them in a residency program, the more likely they are to stay.”

John Supplitt, a senior director (“I’m the rural guy”) at the American Hospital Association, said occupancy rates at rural hospitals average 40% and those with fewer than 50 beds have the lowest rate (33%) since 2015.

“They have a challenging payer mix that makes them more vulnerable to federal payer changes,” he said, adding that 56% of their revenue comes from Medicaid and Medicare. The broader trend of more outpatient procedures also hurts rural hospitals, where the increase in outpatients doesn’t offset the loss of inpatient volume.

Compounding the dependence on Medicaid and Medicare, rural residents are more likely to have high-deductible policies than city-dwellers, which means they may be unable to afford care.

On a hopeful note, Supplitt cited communities in Vermont and Georgia who worked with state agencies to add facilities to small towns.

“Not every community can maintain a hospital, but every community needs a medical presence,” he said. “It takes a lot of mobilization from both policymakers and health care providers to make that happen.”

Hawaii Senator Roslyn Baker (D) said her state, which expanded Medicaid in 2014, is facing a shortage of 800 primary care providers, which is most acute on the less-populated islands and exacerbated by the high cost of living and an aging population.

The state provides loan repayments for nurse practitioners, doctors and physician assistants and is expanding its telehealth capacities.

Only 49% of Kansas’ needs for health professionals are being met, said Senator Elaine Bowers (R) and five rural hospitals have closed in the state since 2010. Nearly three-quarters of rural Kansas hospitals are operating at a loss.

A visa waiver program eliminates the two-year home country residency requirement for non-citizen physicians who are international medical graduates if they commit to practicing in a health professional shortage area.

Kansas has not expanded Medicaid. Proponents fell one vote short of adding expansion to the legislative calendar this year.

An intriguing program is the University of Kansas Medical School campus in Salina (population under 50,000), which admits eight students per year and is the smallest medical school in the nation. The aim is to train students who will work in rural areas.

Haley Nicholson, a senior committee director in NCSL’s State-Federal Relations Division, briefed the session on Disproportionate Share Hospital (DSH) Payments, which states are required to make to hospitals serving a high number of Medicaid and other low-income patients and the Rural Health Demonstration funding through the Centers for Medicare & Medicaid Services.

The program would give rural areas seed money to help redesign their health care systems and encourage providers in those areas to participate in value-based care. The money could be spent on telehealth development or hub and spoke models. Details are pending.

Mark Wolf is editor of the NCSL Blog.

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About the NCSL Blog

This blog offers updates on the National Conference of State Legislatures' research and training, the latest on federalism and the state legislative institution, and posts about state legislators and legislative staff. The blog is edited by NCSL staff and written primarily by NCSL's experts on public policy and the state legislative institution.