Financial problems may force one-in-five U.S. rural hospitals to shutter

Feb. 21, 2019

A new analysis from Navigant reveals as many as one in five rural hospitals – 64 percent of which are considered vital providers and economic anchors in their communities – are in danger of closing if their financial picture doesn’t improve.

Looking at public data, researchers reviewed the financial viability of and community value of 2,000-plus hospitals in rural communities across the country and discovered that 21 percent are at high risk of closing based on their total operating margin, days cash on hand, and debt-to-capitalization ratio. Looking at it another way, the analysis showed 430 hospitals in 43 states with 150,000 employees would be affected. According to the data Navigant analyzed, 277 of these hospitals are considered essential to their community’s health and economic well-being based on their trauma status, service to vulnerable populations, geographic isolation, economic impact.

Low population growth in those areas, payer mix degradation, excess hospital capacity due to declining inpatient care, and little money to adopt essential technology could be to blame with analysts suggesting that government, academic and other group interventions, including partnerships that involve telehealth, revenue cycle, human capital, electronic health record use, physician training, and clinical optimization could keep these health systems open.

Navigant has the full analysis.

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