As part of a national trend, many Texas rural hospitals continue to struggle, which is the result of cuts in Medicare and Medicaid payments over the past four years. Those cuts are resulting in an annual loss of revenue totaling almost $100 million for Texas 171 rural hospitals. Due to decreased revenues, a number of rural hospitals remain in financial distress and more could be on the brink of closing.
Thirteen Texas rural hospitals have closed since January 2013 and that many or more could close this year if full payment is not restored, according to David Pearson, CEO of Texas Organization of Rural & Community Hospitals (also known as TORCH). Nationwide 56 rural hospitals have closed over a similar period of time and another 283 are considered at risk at this time.
Pearson said the need varies from community to community. Some good news is that Texas rural hospitals will see slight relief as the Texas Legislature restores on September 1, 2015, many of the past Medicaid cuts. Pearson points out that restoring those payments will only reduce the total cuts by one third and that this partial state-level relief may be coming too late for some facilities. “Congress has yet to step up and address many of the damaging Medicare cuts made to hospitals,” stated Pearson.
Urban hospitals may have other avenues to recover from cuts, but rural hospitals do not. Don McBeath, Director of Government Relations for TORCH, says rural hospitals have the great deficit because they often treat a higher percentage of Medicaid and Medicare patients.
Rural hospitals have always struggled due to different operating dynamics such as caring for a higher percentage of poor and elderly, operating with a near negative financial margin due to lower patient volumes, dramatic swings in patient numbers from day to day, medical staff recruitment challenges that drive up payroll costs, and a general lack of economics of scale that can be derived through high-volume purchasing.
In a small town, the local hospitals are critical to their local economy. If hospital employees are forced to relocate following a closure then that leads to a reduction of dollars flowing into the local economy.
Closures also lead to tragedies according to TORCH. An 18 month old infant died choking on a grape when the family rushed the child to Shelby Regional Medical Center in Center Texas and found it closed. The child died before reaching the nearest hospital past Center. Pearson says his organization is working with member hospitals to help them find ways to survive but he “hopes the restoration of state Medicaid dollars and a quick response from Congress will end the crisis; but probably not before more rural hospitals close their doors in Texas.”