Hospital closures are a hot-button issue in the world of
healthcare. According to the
Cecil G. Sheps Center, 47 rural hospitals closed from
2010-2014, in turn affecting more than 1.5 million people
in their service areas. With small communities depending
on hospitals not just for healthcare, but also for
employment and economic gain, some officials are studying
the impacts and ramifications of these closures.
Charles Owens, executive director of the Georgia
Department of Community Health, State Office of Rural
Health, has researched extensively on this topic. In his
studies, he has come across some main contributors for
Keeping the Doors Open
A lack of utilization is perhaps the most obvious reason
that a hospital closes its doors.
“Hospitals are a volume-based
business,” said Owens. “There is a
level of profitability that is essential to be able to
survive, as it is with any business.”
Hospitals are a volume-based business. There is a level
of profitability that is essential to be able to
survive, as it is with any business.
Hospitals must begin having honest conversations about
the different things they want, need, and can financially
support. Hospitals also need to look at the services they
provide and determine which are necessary and
sustainable, and which are not. An evaluation needs to
take place to find the main sources of revenue. Hospitals
can use this information to tailor their offerings, while
being mindful of expenses.
Secondly, Owens acknowledges that our culture is more
mobile than it ever has been, making it necessary for
hospitals to differentiate their offerings and compete
for customers more aggressively than ever.
While a hospital may hope good publicly-reported quality
measures are sufficient for patients, Owens says,
“Consumers associate aesthetics with higher
quality care; our hospitals must be able to compete on
Due to our mobile culture, Owens described how some
patients don't mind traveling to other hospitals as they
seek the level and perceived quality of care they desire.
Part of the marketing strategy for rural facilities can
be reminding residents that, in order for the hospital to
be there when they have an urgent need, they have to
support it on a routine basis, just like any other
business. But that message isn't enough. Rural hospitals
also should promote the ways in which they are unique to
attract patients, such as by emphasizing quality,
customer service, specialty providers/services, and new
Owens mentioned that healthcare, as a whole, hasn't
necessarily adapted to the market, which can potentially
contribute to a hospital's downfall. Those who live in
rural communities, especially younger residents, have
adopted more technology and are more likely to be aware
of the availability of competing services and demand care
that they perceive to be superior; rural hospitals must
be that “hospital of
choice”. While rural hospitals have
the advantage of being a convenient option for patients
in their communities, if patients fail to see the
advantages of physical, in-person appointments over the
growing options for virtual care, rural hospitals and
associated clinics can be in danger of losing business.
Technology can also work to a hospital's advantage.
“Technology works great when it's affordable
and there is a benefit and cost savings, such as with
electronic medical records,” said Owens.
It can also assist hospitals by allowing greater
efficiency. Failure to utilize technology can contribute
to a hospital's decreased volume and revenue.
Finally, rural communities have a difficult time
recruiting professionals, which influences the types of
services local hospitals can provide. Local hospitals and
communities alike have to create ways to incentivize
healthcare professionals to practice in their areas.
When Rural Hospitals Close
According to the
Sheps Center, the states that have seen the most
rural hospital closures include Texas, Georgia, and
Alabama. Owens speculated that these areas may experience
a high number of rural closures due to the close
proximity of nearby hospitals, higher poverty levels,
poor local health, and greater reliance on
Medicare/Medicaid. These factors, combined with the
population's high demand for services, make it hard for
rural hospitals to keep their doors open.
“It's hard to manage a physician practice in an
area where the patient population has high percentages of
patients with lower paying government coverage.
Those markets are challenging to maintain a financially
viable medical practice,” said Owens.
Unfortunately, some hospitals have no choice but to
close. In those instances, Owens said it is crucial that
they communicate with regulatory agencies at the state
and federal level, give employees adequate notice of the
impending closure, and provide information to the public
on what is happening and where they can receive service.
In addition, hospitals have to follow procedures on
taking down hospital road signs and disposing of
Hospital closures have ripple effects and put strains on
other local programs, such as emergency medical services
(EMS). When a rural hospital closes, EMS may become the
main source of healthcare for the area. As a result,
demand increases and the EMS staff may spend more time
transporting patients to distant hospitals.
So what can hospitals do to stay afloat during the
country's massive string of closures? Owens' solution:
operate hospitals more like businesses.
As such, hospitals will have to secure local utilization
by appealing to shrewd healthcare shoppers. This may
involve changes to existing mindsets, operations, and
services provided. For Owens, the bottom line is,
“rural hospitals must become hospitals of