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Rural Hospital Closures and the State of Rural Health Timothy D. McBride, PhD Brown School Center for Health Economics and Policy Washington University in St. Louis RUPRI Center for Rural Health Policy Analysis May 2018 RUPRI RUPRI Center Center for for Rural Rural Health Health Policy Policy Analysis Analysis Briefing

Excerpt from briefing given for Senate Finance staff, April 24, 2018 Presenters: Mark Holmes and George Pink, UNC-Chapel Hill Keith Mueller, University of Iowa Tim McBride, Washington University in St. Louis Focus primarily was on rural hospital closures Background Why are hospitals closing? Policy options? RUPRI RUPRI Center Center for

for Rural Rural Health Health Policy Policy Analysis Analysis Rural Hospital Closures RUPRI RUPRI Center Center for for Rural Rural Health Health Policy Policy Analysis Analysis RUPRI RUPRI Center

Center for for Rural Rural Health Health Policy Policy Analysis Analysis RUPRI RUPRI Center Center for for Rural Rural Health Health Policy Policy Analysis Analysis RUPRI RUPRI Center Center for

for Rural Rural Health Health Policy Policy Analysis Analysis RUPRI RUPRI Center Center for for Rural Rural Health Health Policy Policy Analysis Analysis Missouri Rural Hospital Closures (since 2014)

Closures Twin Rivers Regional Medical Center, Kennett, MO in 2018 (116 beds) SoutheastHEALTH Center of Reynolds County, Ellington MO in 2016 (21 beds) Parkland Health Center, Farmington MO in 2015 (98 beds) Sac-Osage Hospital, Osceola MO in 2014 (47 beds) In financial distress and close to closure Southeast Health Center Ripley County, Doniphan, MO (not yet announced, but expected soon unless a new buyer is located) Iron County Medical Center, Pilot Knob, MO (bankruptcy)

RUPRI RUPRI Center Center for for Rural Rural Health Health Policy Policy Analysis Analysis Missouri Rural Hospital Closures (since 2014) Dr. Randall Williams: I am surrounded by heroes in this room. This could have been a problem you run away from, so I just cant thank you enough from the health care community for your vision and

your willingness to take on this challengeWere working with county commissioners. Were getting every resource. We are paving a way to make that RUPRI Policy RUPRI Center Center for for Rural Rural Health Health Policy Analysis Analysis happen. Financial distress

Causes of financial distress and closure are multi-facted and complex Long-term unprofitability is a major cause Many factors go into contributing to long-term unprofitability Low volumes Market structure Population served (older, sicker, lower incomes) Service mix Workforce issues Technology challenges Policy challenges: lack of Medicaid expansion, low payment, Medicare payment changes The South has the greatest number of rural hospitals at high risk of financial distress RUPRI

RUPRI Center Center for for Rural Rural Health Health Policy Policy Analysis Analysis RUPRI RUPRI Center Center for for Rural Rural Health Health Policy Policy Analysis Analysis RUPRI RUPRI Center

Center for for Rural Rural Health Health Policy Policy Analysis Analysis RUPRI RUPRI Center Center for for Rural Rural Health Health Policy Policy Analysis Analysis Why are rural health systems stressed?

RUPRI RUPRI Center Center for for Rural Rural Health Health Policy Policy Analysis Analysis Nonmetro areas have NOT recovered to the employment levels they held prior to the Great Recession. Metro areas

had by mid 2013. RUPRI RUPRI Center Center for for Rural Rural Health Health Policy Policy Analysis Analysis Though poverty rates fell significantly until the early 1970s, nonmetro

poverty rates have always been higher than metro poverty rates. RUPRI RUPRI Center Center for for Rural Rural Health Health Policy Policy Analysis Analysis Some rural areas in the U.S. have significantly

higher poverty rates; mostly in the rural South and Southwest, Appalachia. RUPRI RUPRI Center Center for for Rural Rural Health Health Policy Policy Analysis Analysis Since the 1980s, population

growth has lagged in nonmetro areas as compared to metro areas. Depopulation occurred after Great recession. RUPRI RUPRI Center Center for for Rural Rural Health Health Policy Policy Analysis Analysis

More than a third of the counties in the U.S. experienced population decline over the 2010-16 period. Almost all nonmetro counties had population growth below 4.5% RUPRI RUPRI Center Center for for Rural Rural Health

Health Policy Policy Analysis Analysis Median age: Rural 43, Urban 36 % of population age 65+: Rural 17.2%, Urban 12.8% Aged population will double from 2000 to 2030! Implications for Medicare&Medicaid Map shows two reasons for this: migration to retirement/recreation

counties, but also loss of population elsewhere. RUPRI RUPRI Center Center for for Rural Rural Health Health Policy Policy Analysis Analysis A lower proportion (28%<41%) have college education in rural America.

Implication for opportunities for skilled labor positions. RUPRI RUPRI Center Center for for Rural Rural Health Health Policy Policy Analysis Analysis RUPRI RUPRI Center Center for for Rural

Rural Health Health Policy Policy Analysis Analysis Change in Uninsured Rate in U.S., 2013-16 Nonmetro Metro All 2013 2016 12.8% 13.4% 13.3%

9.4% 8.7% 8.8% Change 2013-16 -3.4% -4.7% -4.5% SOURCE: Bureau of the Census, CPS ASEC, 2013-16. RUPRI RUPRI Center Center for for Rural Rural Health Health Policy Policy Analysis

Analysis Medicare Advantage Enrollment Growth Continued steady growth in Medicare Advantage enrollment in rural and urban areas. But rural enrollment has always lagged behind urban by about 10 percentage points. Implications for rural provider

payment. RUPRI RUPRI Center Center for for Rural Rural Health Health Policy Policy Analysis Analysis Medicaid Enrollment Growth Medicaid and CHIP enrollment growth 38% growth in Medicaid Expansion States 12% growth in non-expansion states 29% growth overall in all states Source: CMS, January 2018.

RUPRI RUPRI Center Center for for Rural Rural Health Health Policy Policy Analysis Analysis More than 63% of rural hospital inpatient days paid by Medicare and Medicaid; 49% for urban hospitals.

SOURCE: Healthcare Management Partners, LLC, June 2017. RUPRI RUPRI Center Center for for Rural Rural Health Health Policy Policy Analysis Analysis Key takeaways Many rural hospital closures in recent years nationally And a number of other rural hospitals facing significant financial stress Missouri: four rural hospital closures since 2014

Causes of financial distress and closure are complex and the number of hospitals at risk of financial distress is growing Rural America has endured major shocks in the last few decades to its economy Like the rest of America, rural America is aging, but a faster rate Educational attainment levels are lower Payer mix Uninsured rates lower since 2013, but drop smaller in rural Medicaid coverage growing, Medicare Advantage growing (and Medicare) Lack of Medicaid expansion adding to financial stress in some states Marketplace enrollment lower in rural Center for Rural Policy

RUPRI Center forproportion Rural Health Health Policy Analysis Analysis Overall:RUPRI rural has higher of funding covered by public funding RUPRI RUPRI Center Center for for Rural

Rural Health Health Policy Policy Analysis Analysis Contact Information Timothy McBride [email protected] RUPRI RUPRI Center Center for for Rural Rural Health Health Policy Policy Analysis Analysis

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