(The Center Square) – A confluence of factors, from increasing labor and drug costs to declining populations, are fueling rural hospital closures in North Carolina and across the country, a trend that researchers fear could accelerate in the short term.
“Nationally, there’s been 196 closures since 2005, and when we look across the country there’s a lot of different reasons,” George Pink, deputy director of UNC Chapel Hill’s NC Rural Health Research Program, told The Center Square.
They include market factors like declining populations, increasing numbers of uninsured patients, and competition, as well as hospital specific factors including struggles attracting and retaining staff, fraud, and patient safety issues.
“There’s also events that happen in communities that you can’t see in the data,” Pink said, such as CEOs or physicians leaving.
“Typically, these hospitals have been losing money for many years,” he said. “They just … run out of survival strategies and have no alternative but to close.”
“There are many unique community circumstances at play,” Pink said.
Data shows the number of rural hospital closures nationally grew from three in 2010 to 18 in 2020, before federal COVID-19 aid helped to prop up finances and reduce the figure to three in 2021, and seven in 2022.
The federal funds have since dried up, leaving rural hospitals on their own to deal with labor and drug costs that have only continued to rise.
“It’s now August and there’s been 12 closures in 2023,” Pink said.
The latest in North Carolina came last week when Martin General Hospital in Williamston suspended operations and announced plans to file for bankruptcy, citing financial losses of $30 million since 2016. Data analyzed by U.S. News and World Report shows 11 rural hospitals have closed in North Carolina since 2005, the third highest figure in the nation, while research from the Center for Healthcare Quality and Payment Reform estimates six are at imminent risk.
“A lot of people in the rural hospital community are very concerned about 2024,” Pink said.
Nick Galvez, Rural Hospital Program manager for the North Carolina Department of Health and Human Services, works to support 32 of the state’s 50 rural hospitals that qualify for state or federal grant programs, including 20 considered critical access hospitals.
While the funds help support child psychiatry, training and certification programs, and incentivize doctors and clinical providers to work in rural communities through student loan repayments, struggles persist, he said.
“It’s so multifaceted and every county is different,” Galvez said. “They can’t find staff in some of these counties.”
Increasing reliance on higher-cost travel nurses and rising drug prices are among the biggest issues in North Carolina, but high percentages of uninsured patients is also a significant factor, said Cynthia Charles, spokeswoman for the North Carolina Healthcare Association.
She pointed to research that suggests states that have expanded Medicaid have fewer rural hospital closures, though Pink contends the research is “controversial and some people don’t agree” with the findings.
“We think Medicaid expansion is crucial,” Charles said.
State lawmakers approved Medicaid expansion in March that’s expected to extend coverage to about 600,000. The change, however, is contingent upon approval of a state budget lawmakers have yet to finalize.
“That will certainly help our struggling rural hospitals when that happens,” Charles said.
Other relief could come through a new Medicaid model specifically directed at rural hospitals at imminent risk of closure, offering a new payment system to transition to rural emergency facilities with no inpatient beds.
“The hope is this model will be a viable alternative to models that cannot be sustained currently,” Pink said, adding that some working to address rural hospital closures are skeptical.
The bottom line, he said, is “without major changes of some sort there could be a drastic increase in the number of closures.”
