Study: Affordable Care Act Helped Save Rural Hospitals

It’s widely understood that rural hospitals are struggling in the current healthcare environment, pinched by the need to keep up with significant — and expensive — medical advances even though smaller patient populations naturally mean less revenue. The Affordable Care Act (ACA) may have made significant headway in helping those beleaguered hospitals, according to a new study conducted by researchers from the Colorado School of Public Health at the University of Colorado Anschutz Medical Campus.

According to the study, the ongoing financial viability of rural hospitals was greatly impacted by whether or not their home state chose to adopt the Medicaid expansion included in the ACA. If the Medicaid expansion was rejected, hospitals in the state were six times more likely to close their doors for good.  

Researchers studied national data on hospital closures and facility finances in fiscal years before the ACA Medicaid expansion went into effect (2008-2012), comparing them to the fiscal years immediately after the influx of federal dollars (2015-2016). They narrowed in on nonfederal, short-term, general, and critical access hospitals that had been functional for at least one year during the time span studied.

In the 32 states that took advantage of the Medicaid expansion, hospitals were approximately 84 percent less likely to close, according to the research.

Richard Lindrooth, PhD, co-author of the study, told The Denver Post that the research gives them means to speculate on how many hospitals could have been saved under different political circumstances.

“We estimated that about half the closures that occurred in states that did not expand Medicaid could have been prevented if they did expand Medicaid,” he said.

When hospitals shut down, the loss isn’t only about healthcare access. Jobs in the healthcare field remain a major driver of the economy. In the most recent Labor Department jobs report, for example, nearly 21 percent of the new jobs added in December 2017 were in healthcare, more than any other sector.

“In rural and smaller communities, hospital closures have a far greater impact because they not only affect the delivery of healthcare services and emergency care, but we also have to consider that these hospitals may be the largest employer and often are pillars in those communities,” Gregory Tung, MPH, PhD, a study co-author, noted. “A closure could mean the loss of well-paid, highly skilled jobs which often leads to well-paid skilled labor leaving those areas for larger cities and urban areas,”

As the Trump administration continues to finesse federal policies around Medicaid, it’s worth remembering that even small changes can have major impacts on healthcare facilities.

“It’s not as though Medicaid is an extremely profitable form of reimbursement, but it is something,” Lindrooth told Colorado Public Radio. “On the margins it certainly helps the hospitals’ cash flow.”

The study is published in Health Affairs.

Main image: In this Thursday, July 30, 2015, photo, a sign stating “Save Our Hospital” sits outside of Wedowee Hospital in Wedowee, Alabama. The hospital closed last year. (AP Photo/Brynn Anderson)