Bubbling Up

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Rural hospitals are in crisis. Over the past decade, 128 rural hospitals across the United States have closed. 2019 was the worst year yet, with 19 closures, including one in Missouri. In all, seven rural Missouri hospitals have closed since 2014, including one that shut its doors earlier this year.

The loss of local health care services may be the most obvious effect of a hospital closure, but it is not the only impact. Rural hospitals are among the largest employers in their communities and serve as local economic engines, creating jobs and attracting and supporting businesses and residents. In addition to compromising the health of the local population, a hospital closure causes job loss, a decline in economic activity, and a loss of vibrancy and quality of life in rural communities. Research shows that a hospital closure in a small town results in a decline of more than $700 per year in per capita income and an increase in the local unemployment rate of 1.6 percentage points.

The Chartis Group, a respected health research and consulting firm, recently released its periodic report on rural hospitals, and the findings weren’t reassuring. Missouri hospitals are in particular trouble – Chartis concluded that 26 Missouri hospitals, more than 42% of all the rural hospitals in the state, are vulnerable to closure. Only three states in the nation have a higher proportion of vulnerable rural hospitals than Missouri. In addition, of these vulnerable Missouri hospitals, 11 are considered to be at greatest risk of closure. Again, Missouri ranks among the national “leaders” on this measure.

There are many factors that impact a hospital’s risk of closure. Rural populations are older, poorer, and sicker than those in urban and suburban areas. These and other factors reflect decades-long demographic trends that have proven difficult to interrupt. One key risk factor for rural hospital closure, however, can be addressed by public policy: a state’s Medicaid expansion status.

Chartis identified the lack of Medicaid expansion as a key predictor of rural hospital closure. Location in a Medicaid expansion state was found to decrease the likelihood of closure by 62%. Conversely, all of the states with the highest number of closures and the most vulnerable and at-risk hospitals are states that have not expanded their Medicaid programs. The Chartis analysis confirms an extensive body of research that has found that rural hospitals in non-expansion states are most at risk.

Medicaid expansion is not a panacea for all the troubles facing rural communities and the rural health system. But the evidence is clear and convincing – expansion enhances insurance coverage, reduces uncompensated care, and improves hospital operating margins. Hospitals in expansion states are far less likely to close. Medicaid expansion is one of the most powerful policy levers available to support rural Missouri.

A vote to expand Medicaid in Missouri was recently pushed up to the primary election being held on August 4, 2020. To learn more about Medicaid expansion in Missouri, visit MakesSenseMO.org.