Federal Program to Save Rural Hospitals Experiences ‘Growing Pains

In this town on the Mississippi River, people are hoping that a new government program will bring back the hope that was written on a plaque on the side of their hospital a long time ago. Along with “Dedicated to the Future of Health Care in the Tri-State Area,” the sign reads. “May 11, 1981.”

Newer signs at the entrances to the building are more worrying, though. “Closed,” they state. “Do Not Enter.”

In October 2022, the Keokuk hospital closed. It had been in rural Iowa, Illinois, and Missouri. New owners, on the other hand, want to open the hospital again with the help of a new government payment system. As part of the Rural Emergency Hospital program, hospitals can get extra money if they stop providing inpatient care and only offer emergency and outpatient services.

That’s why we don’t have a hospital yet, and I don’t think anyone in Keokuk or the nearby areas will be picky about it,” said Kathie Mahoney, mayor of the town of 9,800 people. She said that people would rather have a full-service hospital with sick beds, even though these beds haven’t been used much lately.

The Keokuk hospital’s return would be a small victory in the nationwide fight to keep rural hospitals open. These hospitals are closing because they can’t find enough workers, get enough money, or treat enough patients. Beginning in January 2023, a new government program was put in place to stop the closures. There have been some growing pains, though, according to George Pink, deputy head of the North Carolina Rural Health Research Program. This program keeps track of when hospitals close or change their use.

Out of the more than 1,700 eligible rural hospitals in the United States, only 18 have asked for and been given the new title. Leaders in rural health say that many hospitals don’t want to completely stop providing inpatient care, and some are worried about how this might affect their other sources of income. The new name has also caused misunderstanding because it’s not clear what “rural” means.

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Pink said, “We are still living in a time when rural hospitals are closing.” He said that nine hospitals might close in 2024, and that number could go up in 2023. During the pandemic, hospitals that were having a hard time were able to stay open thanks to a rush of government relief funds. However, most of that money is now gone.

The Rural Emergency Hospital program is the first new way for the federal government to pay hospitals since 1997. Acting Chief Medical Officer of the Centers for Medicare & Medicaid Services Dora Hughes said that the new model’s requirements are set by law and that “hospitals should think about specific circumstances before making the decision to apply.”

Hughes told KFF Health News in an email that the government agency is reaching out to rural areas and wants to hear what people have to say. Carrie Cochran-McClain, chief policy officer of the National Rural Health Association, said that rural health leaders and federal politicians are working quickly to make changes to the new program so that it will get more applicants.

At the moment, hospitals that become rural emergency hospitals get an extra 5% in Medicare payouts and an average of $3.2 million a year in exchange for giving up their expensive inpatient beds and focusing only on emergency and outpatient care. Rural hospitals with less than 50 beds, like Keokuk’s, that shut down after the law was passed on December 27, 2020, can apply for the program and open again with emergency and outpatient services.

Janice Walters, interim executive director for the Rural Health Redesign Center, said that more than 100 rural hospitals across the country have asked about converting. The center has a government grant to help hospitals that want to apply with technical help.

It was Cochran-McClain of the Rural Health Association who said that politicians are thinking about making changes that might let the hospitals:

• Leave some beds open overnight for people who only need a little help, like people with pneumonia or who need physical training after surgery.
• You should let people join 340B, a federal drug discount scheme that gives hospitals extra money.
• Keep psychiatric or rehab rooms for people who need to stay overnight open.
• Make it clear who is eligible, such as which facilities meet the meaning of “rural” and whether hospitals that closed before the law’s 2020 deadline can still apply.