From the U.S. Government Accountability Office, www.gao.gov

Transcript for: Why Are Rural Hospitals Closing And What Is The Impact?

Description: Rural hospitals are closing at an alarming rate, which had
had a significant impact on residents' ability to access health care
services. Closures may have broader implications for communities facing
COVID-19's impacts. We talk with GAO's Greg Giusto to learn more.

Related GAO Work: GAO-21-93, Rural Hospital Closures: Affected Residents
Had Reduced Access to Health Care Services

Released: January 2021 

[Intro music:]

[Greg Giusto:] The hospital closures continues to be an issue in rural
areas. There needs to be continued efforts to identify policy solutions
to combat the rash or rural hospital closures. 

[Holly Hobbs:] Hi, and welcome to GAO's Watchdog Report--your source for
news and information for the U.S. Government Accountability
Office--celebrating 100 years of fact based, nonpartisan government
oversight. I'm Holly Hobbs.

[ Music ]

[Holly Hobbs:] Rural hospitals are closing at an alarming rate. The
number of closures more than doubled between 2013 and 2017 compared to
the previous 5 years--with more than 100 rural hospitals closing during
the last decade. While this number could seem small, rural hospital
closures are having a significant impact on residents' ability to access
health care services and may have broader implications for communities
facing COVID-19's impacts. Today we talk with Greg Giusto, an Assistant
Director on our health care team about a new report on how rural
hospital closures are impacting access to care. Thank you for joining
me, Greg! 

[Greg Giusto:] Thank you for having me. 

[Holly Hobbs:] So, Greg, why are rural hospitals closing? 

[Greg Giusto:] The main reason why rural hospitals are closing is
because they're under financial distress. They have costs that are above
their revenues for a long periods of time. Like any business, you're not
going to be able to do that for very long. And we looked at -- what are
the factors that are resulting in the financial distress for rural
hospitals? First, we found that there has been a decrease in the last
decade of rural residents. And what that means for rural hospitals is
there are fewer prospective patients, which is problematic. Second thing
we found is that more services are being offered outside of hospitals
due to technological advances. So, what I mean there is that, as
technology improves, services that used to be provided only in a
hospital can now be provided in an outpatient setting. So, what that
means for rural hospitals is that they now have to compete for services
that they didn't previously have to compete for. And then the third
factor that we found was that, there's been across t
he bord Medicare cuts that have been in effect since 2013, and that's
really caused a negative impact on rural hospitals' bottom lines. 

[Holly Hobbs:] And it sounds like the pace is picking up. Do we know
why? 

[Greg Giusto:] One of the things that we did look at was margins, which
is the percentage of revenue that remains after costs are paid. For
rural hospitals' margins have been decreasing over time. And when we
looked at rural hospitals that closed, we found that many of them had
negative margins, which isn't surprising. That's why they're closing.
What was surprising was when you look at hospitals that remained open,
those hospitals also were dealing with a decrease in their margin. What
that means for rural hospitals is, that they have less money that's
available to them to be prepared for emergency situations, such as the
COVID-19 pandemic. And as a result they're more susceptible to closure. 

[Holly Hobbs:] And can you give us some examples of how rural hospital
closures might impact rural residents? 

[Greg Giusto:] What we looked at in our work specifically was how does
it affect access to hospital care and other health care services. First,
we looked at how rural hospital closures affected the number of
physicians in a community. And what we found is that when a rural
hospital closes, there's a decrease in the number of physicians who
remain in that community. There was a 16% decrease in physicians who
remained after a rural hospital closed. The second way we looked at
access was looking at travel distance. And for travel distance we found
that, when a hospital closes, a rural resident would have to travel
about 20 miles more to get a common service, things like general
medicine or general surgery. However, when you look at services that are
less common, things like substance abuse treatment, that milage was much
greater. So if the hospital closed that offered substance abuse
treatment, residents had to travel 40 miles more in order to get that
care. 

[Holly Hobbs:] How might the loss of the hospital in a rural community
differ from one in an urban or suburban community? 

[Greg Giusto:] Yeah, so that's a good point, and the Kaiser Family
Foundation has done some research. And they found that closures may have
a more disproportionate effect on individuals who are elderly and
low-income. And what I mean by that is, if there's a community where a
rural hospital closes, and maybe there's less access to emergency
medicine-- if you are an elder resident of that town, versus if you're a
younger resident--it's the older resident who's more likely to face
negative consequences as a result of that hospital closure. Rural
residents tend to be older and have lower income than individuals in
urban and suburban populations. So, as a result you really can expect
that there's going to be more of a negative impact for rural areas than
in those other areas.

[ Music ]

[Holly Hobbs:] So, it sounds like rural hospital closures can impact
residents by increasing the distance to health care services, as well as
further diminish the number of private care providers in a community.
And that while we can see the negative impacts, it is likely that more
rural communities will experience hospital closures in the future. Greg,
do we know how rural hospital closures might impact rural residents'
ability to get treatment for COVID-19 or a vaccine? 

[Greg Giusto:] If you look at some of the access issues that we did
identify, it's not hard to imagine how that could affect COVID-19
treatment. So, if there are fewer physicians who are available to
provide care, or if you're in need of emergency care with COVID, and you
have to travel farther to get needed care, that's really going to affect
your health outcomes. When it comes to vaccine distribution, I think
it's really too early to tell. While only anecdotal, there have been
some success stories of vaccine distribution in rural areas due to
decreased logistical hurdles and fewer individuals who have to be
vaccinated. At the same time there are other rural counties that have
yet to receive any vaccines. So, it's really a mixed bag and we don't
know the role yet of rural hospital closures in that. So we're really
going to have to wait and see. 

[Holly Hobbs:] And what about the pandemic's effects on rural hospitals
financially? 

[Greg Giusto:] The pandemic affects rural hospitals financially in a
couple of ways. First, it affects their revenue. So rural hospitals
offer services like emergency medicine and certain elective surgeries
that they use to be profitable, which allows them to subsidize other
less profitable services. And what's happening is that, there's been a
decrease in those profitable services. People are less likely to go to
the emergency room, and elective surgeries are being cancelled due to
the COVID-19 pandemic, as well as just the preference of patients. And
so, as a result, rural hospitals are facing a decrease in their
revenues. At the same time, a lot of these rural hospitals are required
to make investments in technology, such as ventilators, and to purchase
Personal Protective Equipment -- things that they need in order to fight
the pandemic. So, when you see an increase in costs combined with a
decrease in revenues, it's really a recipe for additional financial
stress on rural hospitals. 

[Holly Hobbs:] And last question--Greg, what's the bottom line of this
report? 

[Greg Giusto:] So, hospital closures continue to be an issue in rural
areas--with 33 more rural hospitals closing from 2018 through 2019. And
what our report really sheds light on is, what does that mean for the
beneficiaries in those areas where rural hospitals closed? And what we
found was that those residents are facing access issues. They're having
less access to physicians and they're having to travel further to access
care. And when you combine that with the fact that many of the
beneficiaries in those areas also happen to be sicker--it really
suggests that there needs to be continued efforts to identify policy
solutions to combat the rash or rural hospital closures. 

[Holly Hobbs:] That was GAO's Greg Giusto, talking about a new report
that looked at the effects of rural hospital closures on communities.
Thank you for your time, Greg. 

[Greg Giusto:] Thank you. 

[Holly Hobbs:] And thank you for listening to the Watchdog Report. To
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