Fully a third of Missouri’s rural hospitals are in danger of closing in the next few years, leaving large swaths of the state without access to emergency services, obstetrics or even the most basic health care.
It’s part of a national trend that qualifies as a looming crisis — one that might be addressed with a fundamental change in how the private insurance industry pays hospitals on behalf of insured patients.
A study released last month by the national Center for Healthcare Quality and Payment Reform found that 19 of Missouri’s 57 rural hospitals are in danger of closing their doors in the next two to seven years because they aren’t taking in enough revenue from payments to cover their costs.
Here and around the country, rural hospitals’ long-term financial slide was alleviated by federal pandemic aid programs for the past three years but now has resumed with the end of those programs.
The numbers are daunting. One rural Missouri hospital administrator in Hermann told the Missouri Independent that after being kept afloat since 2020 by federal COVID-relief funding, “We are back to losing over $1 million this year.”
Those financial issues are likely exacerbated in Missouri by the widely reported difficulty in getting doctors to come here — a situation that cannot have been improved by last year’s enactment of a draconian state abortion ban that threatens doctors with 15 years in prison for violations.
Indeed, as struggling Missouri rural hospitals cut back on services, obstetrics is in danger of becoming a prime target. As the Independent reports, for instance, Cox Monett Hospital in southwest Missouri is shuttering its inpatient obstetrics unit this summer due in part to difficulty recruiting doctors. For local residents, it will mean traveling close to an hour for services.
But the main culprit in the crisis, CHQPR maintains, is the private insurance industry, with its one-size-fits-all approach to paying hospitals.
That approach doesn’t take into account the fact that it’s inherently more expensive for smaller hospitals to provide care than it is for larger, busier ones, based on economy of scale. For example, all hospitals with emergency rooms must maintain staff 24/7, but in small rural areas, those ERs often stand empty.
Nationally, CHQPR reports, more than 600 rural hospitals, or about 30% of the U.S. total, are in danger of closing in the next few years.
The organization’s report notes the “mistaken belief” that most financial losses for rural hospitals are due to Medicaid patients or the uninsured. In fact, it says, about half of rural hospital patients are under private insurance plans — and those plans, for the most part, “are paying them less than what it costs to deliver services to patients.”
The solution, CHQPR says, is to require that private insurers pay enough to prevent closures of endangered rural hospitals. The organization also calls for restructuring the way payments are made so that they cover not just the cost of services rendered but also “standby capacity” — the fixed costs of keeping hospital units open and staff on hand when there are no paying patients being served.
The organization claims these reforms would cost $4 billion annually. Large as that sounds, it’s actually just one-tenth of 1% of America’s total health care spending.
Whether these are the right solutions is a broader conversation — but it’s one that Missouri’s political leaders in Washington should be having, on behalf of their struggling hospitals back home.
Editorial by St. Louis Post-Dispatch (TNS)
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