New rural hospital model could preserve communities, jobs

When Pickens County Medical Center closed weeks before the first wave of the COVID-19 pandemic, the local pharmacy felt it immediately.

It was one of the many businesses in Carrollton, home to about 1,000 residents in western Alabama, that had to lay off employees and cut expenses after the 56-bed hospital shuttered. Carrollton Drugs had a contract with the hospital to fill prescriptions for the facility’s approximate 200 employees.

Every business, from the agco-op to the café, was affected by the closing, said David Handley, who owns Carrollton Drugs and another pharmacy in Reform, Alabama.

“It was a huge financial and economic hit to this community,” said Handley, who was the pharmacy director of Pickens County Medical Center for about 20 years. “The emotional toll was also huge. People were worried because they didn’t know what to do when mom falls and breaks a hip, when someone has a stroke or when there’s a bad car wreck.”

Pickens County is one of more than 100 rural communities that saw their annual income, population and workforce wane after their hospital closed, new research shows.

Rural workforces shrank by 1.5% and population size declined by 1.1% after their prospective payment system hospitals closed, according to an analysis comparing 109 rural counties that experienced hospital closures between 2001 and 2018 and 1,650 rural counties that kept their hospitals. Hospitals that converted to standalone emergency departments or outpatient hubs limited the economic fallout, the study published Monday in Health Services Research found.

“My co-authors and I believe that hospital conversion should be considered as an alternative to complete closure,” said Tyler Malone, lead author of the study, a health policy and management PhD student at the University of North Carolina.

Ninety-eight rural hospitals across the country have closed since 2005, according to UNC data. Another 83 hospitals converted from inpatient care to outpatient and emergency services over that time frame.

Pickens County Medical Center was one of the most recent hospitals to close. It had an unsustainable mix of too few patients, reduced federal funding and a growing number of uninsured patients, the Pickens County Health Care Authority said in a news release when the hospital closed in March 2020. Hospitals tend to perform worse financially in states like Alabama, which decided to not to expand Medicaid.

“(Rural) hospitals are often the largest employer in community—it’s a scary thing when one closes,” said Jeff Goldsmith, president of the consultancy Health Futures.

Short of closing, rural hospitals have had to carve out certain services to stay afloat. Nearly 200 rural hospitals stopped providing obstetrics care from 2011 to 2019, while close to 300 rural hospitals dropped chemotherapy treatment from 2014 to 2020, data from the Chartis Center for Rural Health show.

Residents have had to travel farther for care as a result, which has hurt their health.

“I know of two recent cases—one where a child and another where an adolescent were trying to get to DCH Regional Medical Center in Tuscaloosa about 35 minutes away—and they didn’t make it,” Handley said. “We have one ambulance in this county now, and if it is on call or sitting at DCH, families have to pile into their car to go to the closest healthcare facility.”

Rural hospital closures widen health inequities, studies show. Rural counties that lost their hospital between 1990 and 2020 had higher shares of Black and Hispanic residents compared with the median across all rural counties, related research published in March by the NC Rural Health Research Program found. Those same counties also were more likely to have higher-than-median levels of income inequality, lower per-capita income and higher unemployment, according to the working paper.

That trend explains, in part, why Black and Latino Americans living in rural areas are more likely to die prematurely or experience poverty, particularly among children, according to Chartis.

“If you lose a rural hospital, you are talking tumbleweeds downtown. It means Main Street dries up and blows away because affiliated healthcare services can’t survive very long in the absence of an acute-care backstop,” said Michael Topchik, national leader for Chartis. “Lack of access means delayed care, poorer outcomes and more expensive acute care down the road when things could’ve been taken care of more locally.”

Rural hospitals are trying to keep patients in their communities and stave off service line cuts. They have partnered with neighboring academic medical centers to try to maintain services via video consultations. Alternatively, more facilities are expected to convert to standalone emergency departments or outpatient hubs, which could provide a buffer for local economies, policy experts said.

Operating costs, often subsidized by taxpayers, decrease when hospitals wind down inpatient care. Their quality may also improve as they focus on a more limited range of services, said Ge Bai, an accounting professor at Johns Hopkins University who has studied rural hospital closures.

“This transformation makes the hospitals financially healthier and better able to serve the local community and reduce taxpayer burden, without hurting local economies,” she said.

Critical-access and rural hospitals with fewer than 50 beds can convert to the new Rural Emergency Hospital status. It aims to buoy rural hospitals with very low inpatient volumes, which averaged around 38% in 2016, according to Modern Healthcare’s research.

They would stop offering all their inpatient care and instead offer outpatient services, including around-the-clock emergency care, observation, nursing facility services and ambulances. Starting in 2023, those hospitals would receive a Medicare outpatient reimbursement rate that is 5% higher than what full-service hospitals receive, in addition to monthly facility payments.

The annual income and unemployment rate of counties where rural hospitals converted their inpatient operations to emergency, rehab or outpatient care improved post-conversion, the study found. The effects on the population and labor force were negligible. But it remains to be seen whether those models are viable long-term, Topchik said.

In the meantime, Carrollton residents like Debra Sudduth have had to navigate health emergencies without a local safety net.

Sudduth’s dad has atrial fibrillation. His pulse significantly dropped Monday night, but the closest hospitals in Tuscaloosa or Columbus, Mississippi were overwhelmed, she said. Luckily, they were able to stabilize him at home and track his pulse through an oximeter, Sudduth said.

But last month, a complication arose from his ablation. His heart filled with blood and caused an infection. An ambulance wasn’t available, and they had to drive about 45 minutes to the Tuscaloosa hospital, Sudduth said.

“He ended up OK, but what if he hadn’t? You have a lot of older people here and driving 45 minutes when an ambulance isn’t available—it’s just dangerous.”