Rural Hospitals May Get Federal Aid to Reshape as Standalone ERs

The Biden administration must prioritize and make use of a new measure to aid struggling rural hospitals before more close, Senators Charles Grassley and Amy Klobuchar said.

On Thursday, the pair sent a letter to the Centers for Medicare & Medicaid Services asking the agency to prioritize implementation of a new Rural Emergency Hospital designation. “If nothing is done, more hospitals and rural Americans will continue losing access to essential medical services resulting in poorer outcomes and higher costs for patients and taxpayers,” the senators said in the correspondence.

The measure sponsored by Grassley and buried in the almost 6,000-page stimulus act signed late last year has garnered little attention so far. But it provides a potential lifeline for rural hospitals, which have struggled to stay afloat for years against declining and aging populations. It’s a bipartisan crisis, as the letter reflects, and both senators represent largely rural states.

At issue are thousands of facilities that serve some of the nation’s most vulnerable patients. The new measure culminates years of effort to address a wave of rural hospital closings -- more than 100 since 2013, according to the letter.

“Senator Grassley and I know that we must move quickly to get rural hospitals the resources they need, which is why we’re urging CMS to ensure the new Rural Emergency Hospital Medicare designation established by our bipartisan legislation is swiftly implemented,” Minnesota Democrat Klobuchar said in an emailed statement, calling the facilities “lifelines” that employ thousands.

The measure requires small rural hospitals to shutter their in-patient operations, which often lose money, and revamp as standalone emergency rooms with some outpatient services. Hospitals that receive the status get increased funding.

“It gives a chance for these hospitals to exist,” said Spencer Perlman, director of healthcare research at Veda Partners. “It’s a choice between what you have now and nothing.”

Additional Funding

Perlman estimates hospitals could receive around $750,000 in additional funding under the program, on average, adding that the amount could vary widely depending upon how CMS calculates payments.

The stakes are high. Almost two-thirds of U.S. hospitals are rural, said James Wesp, principal of health-care consultancy Oasis LLC, and a closure can have wide-ranging effects, not only because hospitals are major employers but because “a hospital is a node,” around which a wide variety of medical service providers locate. They may scatter if a facility closes, he said.

But the new status would mean that patients who need to be admitted will have to travel even longer distances for care. Rural hospitals with fewer than 50 beds can apply for the new designation, which takes effect in 2023.

“It might be something we could use,” Bert Cunningham, city manager of Bowie, Texas, said of the new program. “ER in these communities is the most vital part of the hospital.”

Bowie’s hospital shut down early last year and is now up for sale. The closest hospital is about 20 miles away, though patients have to travel to another facility 30 miles from Bowie for heart attacks or strokes.

©2021 Bloomberg L.P.

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