North Carolina is known for many things: gorgeous mountains, delicious barbecue, and college basketball. But in December, North Carolina was recognized for something not-as-exciting: The state came in third on the list of the most rural hospital closures since 2005.
A lack of funding — and impractical reimbursement from health insurers – are the biggest culprits. While these headwinds have been hitting rural hospitals hard, unlike other businesses that can adjust their strategy to endure the hardship, hospitals’ obligations have remained the same: see patients and meet the wide array of community needs. They just have to do it with impossibly small and shrinking budgets. Rural hospitals simply can’t afford to keep their doors open, especially amid the losses sustained during the COVID-19 pandemic.
How did we get here?
Reasons abound – systemic poverty that often afflicts rural areas, the growing trend of outpatient services resulting in fewer patients, or even the fact that many Southern states oppose Medicaid expansion. But a key factor is insurance company behavior…and their systemic approach to cutting payments to hospitals.
For decades, health insurance companies have used their tremendous scale and resources (read billions of dollars in annual revenue) to force providers operating on razor-thin margins into accepting unfairly low and unsustainable rates. Meanwhile, year after year, payors continue to raise member premiums to increase profits, instead of using that money to pay fairly for the care their members need. Many insurers have made record profits in recent years, especially during the pandemic; meanwhile, physicians, nurses, and technicians – you know, the people actually providing the care – are left to fend for themselves.
Hospitals and health systems need fair payments so they can continue investing in making healthcare more accessible for the people they serve. Without fair rates paid by health insurance companies, rural hospitals are left with two options: they are forced to close, or to partner with other health systems to ensure their patients can continue to access care close to home.
While consolidation with a larger system can maintain a community’s local access to care, it’s unfortunately a Band-Aid solution at best if payors aren’t held accountable to paying their fair share for provider services.
- And it’s not just North Carolina hospitals we need to be worried about—nationwide, hospitals and health systems are exhausted, and their resources are depleted, because they have spent two years protecting their communities against the pandemic. In total, 181 rural hospitals have since closed since 2005, nationwide. Since 2010, seven have closed in the state of North Carolina alone; if you’re tracking from 2005-onward, that number grows to 11.
Let’s make sure the lifesaving care they provide is protected–and that they are compensated fairly.