It’s becoming a tale of two healthcare systems: while major U.S. metro areas boast the world’s finest medicine, rural America is suffering from a dearth of coverage and hospital closures, according to a wide-ranging report on the state of rural healthcare in America.
In Georgia, 18 rural hospitals are at risk of closure, according to a recent report by Chartis, out of 30 rural hospitals in the state. The report did not name the hospitals, but all are known as Critical Access Hospitals (CAH). Congress created the CAH designation in 1997 in response to over 400 rural hospital closures during the 1980s and early 1990s.
According to the Georgia Hospital Association, 12 hospitals in both rural and metro areas have closed in the state since 2013. For Georgians living in rural areas, the winding down of rural hospital care has meant long drives to major cities like Atlanta for treatment – sometimes while battling cancer.
Half of the country’s rural hospitals are running at a loss, leading to service cuts in Georgia and other states, according to Chartis, a healthcare advisory firm. Texas had the most rural hospitals vulnerable to closure in the analysis, with 45, followed by Kansas (38), Nebraska (29), Oklahoma (22), North Carolina (19), and Georgia and Mississippi (18 each).
Partnerships with larger, urban hospitals and the use of telemedicine could help with some coverage gaps. But the firm points out the decision by Georgia and some other states to not accept a federally funded expansion of Medicaid has left more people without insurance — and rural hospitals with unpaid bills. Medicaid was one of nine indicators Chartis found had a significant impact on rural hospitals’ vulnerability. Other indicators included occupancy rates, average length of stay and the number of years the hospitals have reported negative operating margins.
“There’s considerable evidence that Medicaid helps rural hospitals,” Mark Holmes of the University of North Carolina Gillings School of Global Public Health, told The Atlanta Journal-Constitution. “In my state, North Carolina, members of the General Assembly were uncomfortable with Medicaid expansion until they understood the connection between Medicaid expansion and protecting rural hospitals.”
“Not expanding Medicaid is hurting Georgia,” Michael Topchik, the study’s author, told the AJC. “It’s not a political statement, it’s just what the data says.”
Medicaid expansion improves rural hospitals’ financial performance because people who might have gone without insurance and not paid their hospital bills instead get coverage and hospitals get reimbursed for their care.
In Georgia, Gov. Brian Kemp last year began a limited Medicaid expansion, which aims to offer coverage to more poor adults, but enrollment has been low. An effort in the Legislature to approve a greater expansion of Medicaid to more residents failed in March.
People in rural America now have a 43% higher chance of dying from common illnesses than Americans living in cities, data from the Centers for Disease Control and Prevention revealed. Rural women are disproportionately affected, due to lapses in pregnancy-related care, according to the health policy research organization KFF.
In Georgia, 23 rural hospitals have stopped offering chemotherapy over the last decade, Topchik of Chartis said, in an attempt to remain financially viable.
For Stephanie Rewis of Alma in Bacon County, a May 2023 diagnosis of multiple myeloma not only led to a year of cancer treatment, but also a life on Georgia highways. But she considers herself lucky: uninsured when she got the diagnosis, she was able to qualify for coverage through the Affordable Care Act, due to federal rules banning insurance companies from discriminating against people with preexisting conditions. Though she’s grateful for the care she received, her treatment journey meant months of regular, four-hour trips by car to Atlanta with her sister, as well as a 19-day stay in Atlanta after a stem-cell transplant at Emory. The costs quickly added up.
“There was the stress of asking ‘Do I have enough money?’” Rewis told the AJC. “You have to pay for gas, food, housing expenses, and for your caregiver, who is missing work.”
Although rural hospital instability is national in scope, facilities in states that have not expanded Medicaid have consistently performed worse financially than their expansion state counterparts, Topchik said. Georgia is one of ten remaining U.S. states to oppose Medicaid expansion, according to KFF.
Rural hospitals’ financial woes have been in the news for two decades, but Holmes said Georgia and other U.S. states now face a choice as to the future of their states’ hospital infrastructures. “Rural hospitals take care of people who live in rural areas, but also Americans who are on vacation, skiing, hiking, etc. When people get injured, you want to have a hospital nearby.”
According to the report’s findings, the jump in popularity of Medicare Advantage plans in rural Georgia is also weighing on rural hospitals, since these plans reimburse hospitals at a lower rate than traditional Medicare. Advantage plans are an alternative to regular Medicare coverage offered by private health insurance companies, but that must comply with Medicare rules. The Chartis study found from 2019 to 2023 national enrollment in Advantage plans increased 48%, contributing to a cash flow problem in some of the rural hospitals.
Angela Ammons, CEO of Clinch Memorial Hospital, a 25-bed rural hospital in Homerville in Clinch County, said upgrading her hospital’s bookkeeping and IT infrastructure helped it return to profitability. Grant money from a program begun last year by Mercer University School of Medicine and Children’s Healthcare of Atlanta is also helping. But she says rural hospitals can’t compete with walk-in clinics run by nationwide chain pharmacies.
The state’s shortage of nurses and other medical professionals is also impacting rural hospitals, as the AJC reported in March. Ammons said hospitals like hers are competing with Atlanta and Austin for medical professionals, and that the perception of rural hospitals not being financially stable doesn’t help retain talent.
Topchik and Holmes said rural hospitals carry higher fixed costs by the square foot compared to other forms of medical care. That’s largely due to the stand-by cost of running a hospital: rural hospitals might not have patients coming in the door every minute, but they have to be prepared as if they did. Moreover, federal law forbids hospitals from refusing emergency care and women in labor, even if patients lack insurance.
CareSource, a Medicaid care management organization which since 2017 has managed part of Georgia’s Medicaid caseload, is budgeting $5 million to help rural hospitals and nursing homes with cash flow challenges, Lisa Marie Shekell of CareSource told the AJC. In 2023, Georgia’s State Office of Rural Health (SORH) invested $17.7 million in state funds and $9.3 million in federal funds in rural hospitals.
Tee Faircloth of the Rural Health Innovation Alliance says measures that help rural hospitals stabilize their cash flows, coupled with IT improvements, can help some hospitals stay in business. “We hope to help hospitals get reimbursed in 12 days, rather than 40 days,” Faircloth told the AJC.
Ammons says her hospital had $1.7 million dollars in bad debt last year from uninsured patients, despite enrolling patients in programs that help cover unpaid bills.
“We really do need Medicaid expansion,” she said.
