Finding Partners

By James X. Stobinski, Ph.D, RN, CNOR, CSSM(E), CNAMB(E)

I have made several recent road trips through rural America in the Southwest and upper Midwest. In those travels I often see rural hospitals in relatively small cities. As someone who writes about American health care this gives me pause to consider the financial health and stability of these facilities and their place within their communities. In many smaller cities these facilities face large challenges, and their continued existence may require joining a larger system. But not all the rural facilities will have access to that lifeline. 

The consulting firm Kaufman Hall, as reported by Condon¹ states that, “Many health systems are expanding into new geographic areas to diversify their portfolios, strengthen bargaining power and pursue further economies of scale.” Kaufman Hall expects that large systems will continue to adjust their portfolios of hospitals to balance their strategic needs with the needs of the communities they serve. ¹Condon, in another article, details such activity by HCA, Tenet, CHS and UHS which are among the largest health systems in the country. ²The buying and selling of hospitals, mergers and acquisitions and the realignment of facilities is a weekly occurrence in American health care. But there is a lingering issue in this trend for many rural facilities.

The Kaufman Hall staff report that despite the overall brisk rate of merger and consolidation activity, “… some organizations that face financial challenges are struggling to find a partner.” This could be precisely the issue for some rural facilities which may desperately need to be acquired but the facility is not financially attractive. A facility serving a sparsely populated area which is remote from the larger facilities in a health care system is not an attractive merger candidate. There are less options for survival for these facilities. A transition to a critical access facility, cutting services and then eventual closure are real possibilities. Reports from authors such as Andrew Cass, writing in Becker’s Healthcare Review, regularly list facilities closing and cutting services and many of these are rural facilities. ³The net result of this activity is that these rural sites, when lacking comprehensive health care facilities, may become less attractive places to live and have difficulty fostering economic development. Rural counties which lack OB/GYN providers and labor and delivery units are not desirable for young families. Difficulty attracting staff and decreasing birthrates exacerbate these issues. These maternity deserts are common in states with large rural areas. As Melillo reports, these deficits contribute to relatively poor maternal mortality rates for our country. 

Access to care is not only a consideration for young families. PRB, a nonpartisan research organization, provides data on another stakeholder in the access to care issue – older Americans. The number of Americans aged 65 or older will increase by 47% by 2050 to 85 million to reach 23% of the entire U.S. population. In 2022 the median age in this country was 38.9 years and that will continue to rise. The percentage of this group living in poverty has steadily decreased and those with some form of health insurance has markedly increased. As we age we tend to use health services more and the availability of health care, especially for chronic conditions, is an important consideration. The lack of even a small community-based hospital may drive away or keep away older citizens. 

The availability of health care in rural communities will influence demographic shifts and impact the financial viability of these regions. Prioritizing access to care in rural areas is an expensive proposition and a low priority in American health care. However, not addressing rural health care has its own costs beyond just health care expenditures.  

– James X. Stobinski, Ph.D., RN, CNOR, CSSM(E), CNAMB(E), is a senior perioperative consultant with National Institute of First Assisting (NIFA).  

References

1. Condon, A. (October 3, 2024). Hospital M&A accelerates, but some “struggling to find a partner”: Kaufman Hall. https://www.beckershospitalreview.com/finance/hospital-m-a-accelerates-but-some-struggling-to-find-a-partner-kaufman-hall.html?origin=BHRE&utm_source=BHRE&utm_medium=email&utm_content=newsletter&oly_enc_id=4467F0926923B3Y
2. Condon, A. (October 4, 2024). For-profit M&A: 26 hospital deals involving HCA, Tenet, CHS and UHS. https://www.beckershospitalreview.com/hospital-transactions-and-valuation/for-profit-m-a-26-hospital-deals-involving-hca-tenet-chs-uhs.html?origin=BHRSUN&utm_source=BHRSUN&utm_medium=email&utm_content=newsletter&oly_enc_id=4467F0926923B3Y
3. Cass, A. (October 10, 2024). 21 hospitals closing departments or ending services. https://www.beckershospitalreview.com/finance/10-hospitals-closing-departments-or-ending-services-5.html?origin=BHRSUN&utm_source=BHRSUN&utm_medium=email&utm_content=newsletter&oly_enc_id=4467F0926923B3YN 
4. Melillo, G. (2020, December 3). US ranks worst in maternal care, mortality compared with 10 other developed nations. AJMC. https://www.ajmc.com/view/us-ranks-worst-in-maternal-care-mortality-compared-with-10-other-developed-nations
5. Fact Sheet: Aging in the United States. (January 9, 2024). PRB. https://www.prb.org/resources/fact-sheet-aging-in-the-united-states/