Closure & Crisis

Rural communities were already struggling to find access to health care — and the pandemic created a crucible moment.

By Amy Wilkinson

Illustrations by Jasu Hu

Illustration of two hands holding a tree on a hill above a small village.

As COVID-19 ripped through rural America, the Centers for Medicare & Medicaid Services in August 2020 announced a model that many hoped would both help overburdened hospitals stay afloat and address long-standing access-to-care inequities. The Community Health Access and Rural Transformation (CHART) model is intended to do so by tying payment to value while aiming to lower costs and increase choices for patients.

Twenty rural hospitals closed in 2020, topping 2019’s total of 18. For some rural hospitals and the communities they serve, the new model could prove to be a lifeline. Already struggling with economic challenges — smaller patient populations that contained a significant number of unemployed or under-employed people or those without insurance coverage — many rural hospitals were in a precarious financial state even before the pandemic hit.

“There are fewer people, so it’s just harder [for businesses] to survive in rural areas,” says Jack Hoadley, PhD, research professor emeritus in the Health Policy Institute of Georgetown University’s McCourt School of Public Policy.

Once the virus emerged, postponed primary care visits and elective procedures threatened to be a fatal financial blow. No matter a hospital’s size or location, insurance coverage plays a huge role in its continued economic viability. Without it, many patients can’t afford their health care bills, and hospitals don’t receive the reimbursements they need to keep their doors open. For rural areas, Medicaid is critical in helping fill coverage gaps.

Under the Affordable Care Act (ACA), states can expand Medicaid to cover uninsured individuals with incomes at or below 138% of the federal poverty level. This provides an option for families making too much money to traditionally qualify for Medicaid but not enough to afford a plan off the market.

“It’s a program that is very important to rural America,” says Adam Searing, associate professor at the Georgetown University McCourt School of Public Policy’s Center for Children and Families. 

“States that have expanded Medicaid have seen a lot more people in rural areas get health coverage than states that haven’t.”

All but 12 states have expanded Medicaid under the ACA. Searing’s team found that 12 of the 17 rural hospitals that closed in the first nine months of 2019 were in states that had not expanded the program.

With CHART, providers have two avenues through which to participate: the Community Transformation Track or the Accountable Care Organization Transformation Track.

Illustration of a hospital.

The first track will distribute $75 million in seed money to up to 15 rural communities to revamp their health care systems. In September, the Centers for Medicare & Medicaid Services announced the application process had begun and encouraged rural communities to apply.

The second track will offer upfront investments to rural providers. As part of the Medicare Shared Savings Program, those providers will enter into two-sided risk arrangements and may use all waivers available in the program. The application process for that is set to open in spring 2021.

Long Distance

In many ways, COVID-19 laid bare the already dire state of health care in rural communities. The approximately 60 million Americans who live in rural areas (about one-fifth of the U.S. population) are, on average, sicker, older and poorer as compared to their urban counterparts.

Older, sicker populations are at greater risk of COVID-19 — a danger compounded by the fact that rural hospitals often lacked the resources to adequately diagnose and treat the condition. An August 2020 report published in Health Affairs found that while many of the poorest neighborhoods in the country have no ICU beds, accessibility differs greatly between urban and rural areas: Just over 30% of poor urban neighborhoods have no ICU beds, whereas more than 50% of poor rural neighborhoods have no ICU beds.

“The urban areas are not as lacking because people are close together,” says lead author Genevieve Kanter, PhD, a professor of health ethics and policy at the University of Pennsylvania. “For example, in West Philadelphia, which is quite a low-income area, that’s also where the Hospital of the University of Pennsylvania is, so they could conceivably have access — assuming payments and insurance and all that — to some great technology.”

As with many health conditions, a lack of access can mean worse outcomes: A study published in JAMA in July 2020 found that COVID-19 patients admitted to hospitals with fewer ICU beds were at a higher risk of dying. But in rural areas, hospital transfers can be perilous — say, when breathing is labored and the nearest ICU is an hour or more away — or impossible. In late 2020, some rural hospitals simply weren’t accepting COVID-19 patient transfers.

“No hospital is going to have an incentive to accept seriously ill COVID-19 patients, especially poor patients,” says Dr. Kanter. “So we need to have a more coordinated system of hospital transfers to ensure that the clinical needs of these patients, as well as others, will be met.”

Dr. Kanter and her research partners also advocate for allocating funds to rural hospitals without ICUs, so that they can establish short-term emergency ICU capabilities to manage severely ill COVID-19 patients.

What’s Next?

Rural health care is at a crossroads. Hospitals that were teetering on the brink of financial insolvency pre-pandemic are now barely holding on. And where doors have closed, communities are scrambling for options.

Just as these rural health care deserts resulted from a confluence of factors, eliminating them will require a multipronged approach. With concentrated efforts from providers, payers, policymakers and researchers at the federal, state and local levels, the rural health care system can slowly move in the right direction to better support patients — including during times of great upheaval, like COVID-19.

“This has been a public health tragedy,” says Dr. Kanter. “But many of us have really focused on responding and learning from this process, and I hope we can get to a different place with the health care system because of it.”

“No hospital is going to have an incentive to accept seriously ill COVID-19 patients, especially poor patients. So we need to have a more coordinated system of hospital transfers.”

Illustration of a woman viewing the city

The State of Urban Hospitals

While rural hospital closures far outnumber those in urban areas, metropolitan medical centers are not immune to the financial challenges wrought by COVID-19. The institutions most vulnerable are the so-called safety net hospitals, which serve the uninsured and those on Medicaid. One such facility is Mercy Hospital & Medical Center in Chicago. Opened in 1852, it’s the city’s oldest hospital, but it was at risk of ceasing inpatient services this year due to fiscal issues, which would have created an approximately 7-mile health care desert on Chicago’s South Side. 

Many city hospitals are feeling the financial crunch, as they’ve had to pivot operations away from more profitable procedures (like surgeries) to focus on taking care of the massive influx of coronavirus patients. In April 2020, it was reported that New York City’s hospital systems were losing between $350 million and $450 million each month battling COVID-19, while around the country, dozens of hospitals furloughed, laid off or reduced pay for their staff to stanch the bleeding while awaiting government bailout funds.

TOPICS: Public Health