Survival of rural hospitals is your issue

Published 1:58 pm Monday, January 14, 2019

By John Henderson

There is a fascinating convergence of rural interests and politics as we approach the 86th state legislative session.  Take November’s election results in deep red Bosque County as an example: local voters carried Ted Cruz by 80%, but also approved a new hospital district tax by 58%.  A takeaway might be that although rural residents align philosophically with Republicans, they are taking the hard step of funding local services because they see a dim future for a town without access to healthcare and no outside help on the horizon.  Since that surprising election result, 2 more rural Texas hospitals – in the communities of Rockdale and Cameron – have closed.  And the hospital in Brenham had to go on diversion for obstetrical services.  The interesting political question is to what extent state and national conservative leaders have acknowledged and earned their solid rural support?

There seems to be an awareness of our challenges when it comes to coverage – Texas has 1 million more uninsured residents than any other state, and those costs are mostly borne by local property taxpayers.  But rural Texas healthcare problems are myriad: 21 hospital closures since 2013 (double any other state), only 66 of 162 rural hospitals still deliver babies, rural demographics are tough (older, poorer, sicker, etc…), workforce recruitment and retention challenges persist, and there is little economy of scale to offset pressure on reimbursement rates from payers. 

With regard to public policy, the proliferation of Medicare advantage across the nation and Medicaid managed care in Texas has harmed providers.  When the state legislature enters 140 days of work next week, they have an opportunity to slow the runaway hospital closure crisis.  Texas rural hospitals – despite legislative direction since 1993 for Medicaid to pay the cost – are being underpaid by health plans by ~$60mm/year statewide because those costs haven’t been updated in almost 10 years.  It would only take a fraction of a percentage point of the overall state budget to revolve, and a remedy would keep local leaders from having to push financial losses to local taxpayers.

In private rural markets, commercial insurance plans are forcing contract renegotiations with rural providers that don’t cover costs, so the rural safety net is fracturing, and network coverage is threatened.  Amidst a strong push for transparency and consumer-driven healthcare, Texas might look to examples like West Virginia, where hospital costs are shared, and commercial payers must pay at least cost.

These issues are important to every citizen in Texas. Even if you don’t live in a rural area, you need the local hospital to stay open because 1) you might be traveling through a rural community and have an accident 2) rural areas are at the heart of the Texas economic miracle taking place – we provide the food, fuel, and fiber for Texas and the world, so it is in everyone’s best interest to keep that rural workforce healthy, and 3) rural hospitals help drive the Texas economy to the tune statewide of 27,500 jobs and their budgets total $3,600,000,000 a year.

Whether you live in rural or urban Texas, the survival of rural hospitals is your issue. Tell your state representative and senator that the Medicaid underpayment to rural hospitals needs to be fixed during the session opening in January.


John Henderson is President/CEO at Texas Organization of Rural & Community Hospitals