States Support Rural Hospitals While COVID-19 Highlights Challenges

June 24, 2020|4:24 p.m.| ASTHO Staff

Since 2010, 129 rural hospitals have closed. An additional 25 percent of rural hospitals—a total of 354 facilities—are at high risk of closure. Further complicating matters, 81 percent of those hospitals are considered essential to their communities—a designation made based on a hospital’s trauma center status, its service to vulnerable populations, its distance from other hospitals, and the economic impact it has on a region.

A wide range of factors have contributed to rural hospital failure over the years, such as:

  • New technology.
  • Shifting demographic patterns.
  • Workforce shortages.
  • Lower inpatient rates.

The COVID-19 pandemic has highlighted and magnified these factors leading to rural hospital closures across the country. In many parts of the country, elective procedures were suspended to conserve critically needed personal protective equipment and to reduce COVID-19 exposure by patients and hospital staff. But for many rural hospitals, the suspension of elective procedures—combined with the reduced the use of non-urgent services by apprehensive patients—meant a loss of revenue and the furloughing of healthcare staff. Unfortunately, these kinds of challenges are not new to rural hospitals.

Research indicates that access to healthcare and economic vitality are severely reduced following a rural hospital closure. Expected outcomes include:

States are using a variety of measures to address and prevent rural hospital closures. These include: providing technical assistance to and studying the financial viability of rural hospitals; expanding and revising payment and funding mechanisms; reducing regulatory barriers to access to care in rural areas; and expanding the healthcare workforce for rural areas.

Several states are initiating legislation to provide technical assistance to and conduct research on rural hospitals. This week, the Mississippi legislature passed HB 94 to establish the Mississippi Center for Rural Health Innovation within the state health department’s Office of Rural Health. The new center is to provide services such as expert analysis and consultation, financial evaluation, contract review, peer support network services, business development training grants, and telehealth investment to rural hospitals and other rural-based healthcare service providers. The state health department is directed to provide personnel and resources for the center’s operation. In Wyoming, a new law (SF 1) authorizes the state health department to fund a third-party report or analysis of the financial viability and operations of rural hospitals in the state. The report is to be submitted to the state health department no later than October 1, 2020.

There have also been allocations for expenses related to COVID-19 and a look at payment methodologies for rural hospitals. In May, North Carolina allocated money (HB 1043) to establish the COVID-19 Rural Hospitals Relief Fund. The funds will offset patient care expenses related to the COVID-19 pandemic. Hospitals may use this money for the following: up to 60 percent of revenue lost due to the suspension of elective procedures; supplies and equipment purchased in accordance with CDC guidelines; trainings for healthcare professionals on infection control and triage; the reconfiguration of areas to screen and treat suspected COVID-19 patients; the increase of patient beds for surge capacity; the transportation of confirmed or suspected COVID-19 patients to or from the facility; planning, training, and implementing expanded telehealth capabilities; the procurement of personnel to review all of the new federal and state regulatory guidelines; and salary support for furloughed employees.

In Missouri, a bill sent to the governor (HB 2020) would establish a pilot program for rural hospital grants to cover expenditures related to COVID-19 testing, environmental disinfection and personal protective equipment, and patient care innovations. Utah passed a bill (HB 2) for state agency funding that directs the state department of health to work with rural hospitals on options for a new reimbursement methodology for rural hospital inpatient billing. The goal is for the new reimbursement methodology will give the state more control over annual cost increases and to keep total state Medicaid funding close to levels from previous years.

States are also attempting to improve access to healthcare services by reducing regulatory barriers for clinics that serve under-resourced rural populations. A new law in Washington State, SB 6359, exempts rural health clinics in state-declared home health shortage areas from going through a certificate of need review.

States are exploring legislation that would recruit and retain a rural health workforce. Oklahoma passed a bill (SB 1276) to increase funding to train primary care and family physicians for rural and medically underserved areas in the state. The new law increases the proportion of state funds used in the training program from 50 to 75 percent. In Florida, a bill passed by the state (HB 607) adds advanced practice registered nurses (APRNs) who practice autonomously to the state’s medical education reimbursement and loan repayment program. The state’s department of health is authorized to make payments to APRNs that provide primary care services to Medicaid recipients and other low-income patients and practice in a primary care health professional shortage area.

To protect health in rural America, states will need a multi-faceted approach to addressing rural hospital closures. For more information on the challenge COVID-19 poses to rural hospitals please register for an ASTHO tele-townhall on July 14, at 3 p.m. ET. This virtual tele-townhall will provide an open forum to discuss how COVID-19 has shifted the landscape for rural hospitals and will offer strategies on how to move forward. In the meantime, ASTHO will continue to monitor state legislation and trends related to rural hospital closures.


Andy Baker-White is the senior director of state health policy at ASTHO.