Experts: Rural hospitals face financial crisis

There’s a crisis at rural hospitals driven by inadequate government funding that is hurting millions of Americans’ access to quality healthcare, experts told the Senate Committee on Finance on Thursday.

Because there are more senior citizens in these rural communities, and who have  disproportionately high rates of chronic illness and obesity, many people in those areas rely on Medicare and Medicaid, according to the Centers for Disease Control and Prevention. But reimbursements from the two federal programs to rural healthcare providers don’t always cover the cost of treatment, forcing hospitals and clinics to close.

Karen Murphy, chief innovation officer at Steele Institute for Healthcare Innovation, Geisinger says given the financial pressure under their current … reimbursement structure, rural hospitals are frequently unable to address the health of their communities.

She now advocates for a new financial model in which rural hospitals are paid monthly from a “global budget” based on the hospital’s annual revenue. Under this plan, hospitals can tailor their services to community needs, she said, and would still treat patients with Medicare, Medicaid and private insurance.

This idea would then give these hospitals a predictable revenue stream. Maryland first used the model and Pennsylvania is beginning to implement a global budgeting system as well.

And Senator Ron Wyden, the committee’s top Democrat, said the bipartisan budget deal signed by President Donald Trump in February extended an “important” program that funds “Medicare-dependent hospitals” — small hospitals in which more than 60 percent of the patients’ insurance coverage is through Medicare.

Since 2010, 83 rural hospitals have closed nationwide and hundreds more are at risk of closing.

Wyden also warned of the Trump administration’s attempts to “slash” Medicaid funding, which he said would “turn rural America into a sacrifice zone where hospitals shut down and people cannot get the care they need.”

Committee Chairman Sen. Orrin Hatch, R-Utah, rebuked Wyden, saying rural hospitals had financial problems long before Trump became president.

But Senator Chuck Grassley  plugged a bill he introduced last May. It would create a new Medicare classification allowing small, rural hospitals to choose to provide only emergency services, lowering their overall costs. Those hospitals would get reimbursements for the cost of transferring patients needing inpatient care. The proposal has co-sponsors from both parties and support from the American Hospital Association.