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FORECASTING: How to predict closure of rural hospitals

From January 2010 to December 2015, 63 rural hospitals closed, and over 1.7 million people are now at greater risk of negative health and economic hardship due to the loss of local acute care services.”

A model to predict financial distress and the risk of closure for rural hospitals is described in this scholarly article out of the Cecil G. Sheps Center for Health Services Research at the University of North Carolina.  The model was validated in that all of the selected financial performance indicators were found to be associated with the likelihood of hospital financial problems.  A surprise was that investor-owned rural hospitals were found to be more likely than expected to be in financial distress; although, this might be linked to their tendency to be located in southern states, which – as a region – are more likely to be struggling financially.

Source: Holmes, G.M., Kaufman, B.G., and Pink, G.H. (2017, Summer). Predicting financial distress and closure in rural hospitals. Journal of Rural Health, 33(3), 239-249.  Click here for access to the publisher’s website: http://onlinelibrary.wiley.com/doi/10.1111/jrh.12187/pdf  Posted by AHA Resource Center (312) 422-2050, rc@aha.org


FACILITY CLOSURE: What happens when rural hospitals close? How are facilities reused?

This is a study of 47 rural hospitals that closed in 2010 to 2014.  It comes out of the North Carolina Rural Health Research Program.  The authors compare characteristics of hospitals that closed completely – which they term as “abandoned” – with those that are no longer providing inpatient care, but now have some other health care-related use – which they term as “converted.”

Of the 47 rural hospitals that closed, a little over half (26 hospitals) were in the abandoned category, and most of these were located in the South – particularly in Texas, Alabama, and Georgia.  The authors found that abandoned rural hospitals tended to be in markets with a higher percentage of non-white population compared to those hospitals that were converted to other health care use.

There is an interesting table included that looks at characteristics of rural hospitals in the year of closure.  Hospitals in the abandoned category had the lowest total margin in that final year – negative 10 percent, while those that were converted to other health care use were in somewhat better financial condition.  All of the rural hospitals that closed were small, with roughly 25 to 30 beds.

Ten of these hospitals converted to freestanding emergency or urgent care facilities; 4 converted to skilled nursing or rehabilitation facilities; and 7 converted to outpatient care.  The perceived impact of losing an inpatient hospital in a community is that patients will have to travel further to obtain care, that jobs will be lost (since the rural hospital is often the largest employer), and a loss of prestige in the community.

Source: Thomas, S.R., Kaufman, B.G., Randolph, R.K., and others. (2015, Apr.). A comparison of closed rural hospitals and perceived impact. Findings Brief.  http://www.shepscenter.unc.edu/wp-content/uploads/2015/04/AfterClosureApril2015.pdf  Posted by AHA Resource Center (312) 422-2050, rc@aha.org


CLOSURE: Why do rural hospitals close?

Characteristics of 42 rural hospitals that closed between 2010 and 2014 were compared to hospitals that remained open in this study out of the North Carolina Rural Health Research Program.

Rural hospitals that closed

  • Were in worse shape financially – lower margin, fewer days cash on hand, higher debt levels
  • Had a higher Medicare patient mix
  • Had lower utilization rates
  • Had lower volume in key services – surgery, outpatient services, and obstetrics
  • Had fewer employees

The researchers also took a look at critical access hospitals that closed compared to other rural hospitals that closed.

Source: Kaufman, B.G., Thomas, S.R., Randolph, R.K., and others. (2016, Winter). The rising rate of rural hospital closures. The Journal of Rural Health, 32(1), 35-43.  http://onlinelibrary.wiley.com/doi/10.1111/jrh.12128/pdf  Posted by AHA Resource Center (312) 422-2050, rc@aha.org