Larger health systems with a variety of services and fewer Medicare patients can try to shift offerings, raising revenue by providing specialty surgeries, such as a hip replacement, or oncology services. But smaller hospitals with fewer resources have less flexibility.
Implementation of the Affordable Care Act may exacerbate the problem for small facilities.
“Revenues are coming down and expenses are not coming down as quickly,” said George Huang, municipal securities research director at Wells Fargo Securities. “The smaller guys have fewer resources available to them.”
The federal government historically has supported rural hospitals. Since 1997 it designated many as “critical access” facilities, recognizing that their small size meant they could only focus on essential medical services. Such hospitals got extra federal funds.
Last year, the U.S. Department of Health and Human Services’ Office of Inspector General recommended the government tighten rules on critical access hospitals to save money. That would likely to cut the number of such facilities by two-thirds.
Funding for the poorest also is changing, as the Affordable Care Act cuts payments for indigent care, in the expectation that many impoverished and uninsured will move to Medicaid. But 23 states have not expanded Medicaid, fearing it could eventually leave them with financial burdens. So in those states, a gap in federal support for the poor has emerged.
Hospitals in states that don’t expand Medicaid will see their profit margins drop by a few percentage-points by 2021, reported research firm The Advisory Board Company. “For many, that could be the difference between being profitable, and being in the red,” the firm wrote on its website in July.
The majority of rural residents in the United States live in states which are not expanding Medicaid, reported the North Carolina Rural Health Research Program. A majority of the 24 hospitals closed since the start of 2013 are in those states.
“In states that are not expanding Medicaid, we’re seeing hospitals close. The finances are just not working out,” said Tim Jost, Washington and Lee University School of Law professor.
‘LONG LIVE FEWER HOSPITALS’
Making healthcare more affordable and efficient is a good thing, say analysts. As the dominant provider in the marketplace, hospitals have “become incredibly inefficient,” because there was less incentive to keep costs down, said Jason Hockenberry, health policy and management professor at Emory’s Rollins School of Public Health.
One in five hospitals, over 1,000 at least, will close by 2020, forecasted Ezekiel Emanuel, a White House health policy special advisor who helped shape the Affordable Care Act.
“Long live fewer hospitals. Welcome to the new age of digital medicine,” Emanuel wrote in his book, Reinventing American Health Care. Clinics can more efficiently take on many duties performed by hospitals, leaving hospitals to focus on the severely ill, he said.
Emanuel predicts the first hospitals to go will be smaller ones, which already operate with less than half of their beds filled. When Linden closed, less than 20 percent of its beds were occupied on any given night.
For Linden resident Bowden, the next trip to the hospital would certainly be longer, although it would be in an emergency vehicle that is a different technological breed from when the little hospital was built.
For decades he’s heard ambulances “ripping up to the hospital.” Now that it is closed, he says, it has been real quiet. (Reuters)[eap_ad_3]
