Rural hospitals struggle to stay open, adapt to changes

OSCEOLA, Mo. -- After 45 years of providing health care in rural western Missouri, Sac-Osage Hospital is being sold piece by piece.

Ceiling tiles are going for 25 cents, the room doors for an average of less than $4 each, the patient beds for $250 apiece.

Soon, the remnants of the hospital that long symbolized the lifeblood of Osceola, population 923, will be torn to the ground.

Sac-Osage is one of a growing number of rural U.S. hospitals closing their doors, citing a complex combination of changing demographics, medical practices, management decisions and federal policies that have put more financial pressure on facilities that sometimes average only a few in-patients a day.

"Money just kept drying up," said Chris Smiley, a former operating-room nurse who was the last chief executive of Sac-Osage and is overseeing its liquidation.

Closed and out of service, the entrance to Sac-Osage Hospital stands empty in Osceola, Missouri. (Orlin Wagner ~ Associated Press)

Fifty hospitals in the rural U.S. have closed since 2010, and the pace is accelerating, with more closures in the past two years than in the previous 10 years combined, according to the National Rural Health Association. That could be the beginning of what some health-care analysts fear will be a crisis.

An additional 283 rural hospitals in 39 states are vulnerable to shutting down, and 35 percent of rural hospitals are operating at a loss, according to iVantage Health Analytics, a Portland, Maine-based firm that works with hospitals.

Most of the rural hospital closures so far have occurred in the South and Midwest. Of those at risk, nearly 70 percent are in states that have declined to expand Medicaid coverage under the federal Affordable Care Act, although some experts are hesitant to draw a cause-and-effect correlation.

Big-city hospitals have been closing at about the same rate as rural ones during the past five years, but an abundance of alternatives in most major metropolitan areas typically lessens the effect on patients. When a rural hospital closes, people may have to travel dozens of miles to reach the nearest hospital -- an inconvenience that potentially is a matter of life or death.

When 18-month-old Edith Gonzalez choked on a grape in August 2013, her parents rushed to Shelby Regional Medical Center in their hometown of Center, Texas, unaware the hospital had closed several weeks earlier. Their daughter was dead by the time an ambulance had taken her to the next nearest hospital, more than 45 minutes later.

In rural North Carolina last summer, 48-year-old Portia Gibbs died from cardiac arrest after waiting 90 minutes for a medical helicopter to arrive. She could have been at a hospital in less than half that time if Vidant Pungo Hospital in Belhaven had not closed just six days earlier.

Her death prompted Belhaven's mayor to walk 273 miles to the nation's capital in an attempt to raise awareness about the plight of rural hospitals. Mayor Adam O'Neal plans to lead a similar march June 1 with supporters from at least 41 states.

The city is trying to acquire the old hospital through eminent domain and seeks $6 million in federal loans to reopen it. Since Gibbs' death, O'Neal said, several others have died before they could make it to farther-away hospitals, including a 16-year-old boy hurt in a farming accident in April.

"We have people needlessly dying," O'Neal said.

Declining populations and stagnant economies make it hard on rural hospitals. Rural areas tend to "have older, poorer, sicker populations," said Michael Topchik, senior vice president of iVantage.

That means they often have a higher percentage of patients covered by Medicare and Medicaid, a pair of government health-care programs that pay a lower reimbursement rate than private-sector insurers. Hospitals that rely heavily on those government programs have been particularly hard-hit by federal budget cuts and provisions in the 2010 federal health-care law that reduced charity-care reimbursements and changed other payment criteria.

At Sac-Osage, poor management played a role in its financial ruin. Some of its doctors, for example, never were approved to be paid by particular insurance companies. And it lost what some staff estimate was $2 million because the clinic failed to send out thousands of bills to insurers and patients since 2012.

For state Rep. Warren Love, a local cattle rancher who tried to help save Osceola's hospital, its passing now seems sort of inevitable.

"Everything has evolved to the big gets bigger and the littlest disappears," Love said, "and that's really what's happened with these hospitals."