Rural hospitals provide more than health care; they are part of the economic lifeblood of rural America

Published April 1, 1991  | April 1991 issue

Rural America cannot support its present complement of hospitals, and the hospitals are going broke.

—Office of Technology Assessment, September 1990

When you wake up at 3 a.m. clutching your chest, you want that hospital right there.

—Jack Geller, director, N.D. Rural Health Research Center

The bottom-line realities of rural hospital closures often clash with the health needs of America's 57 million rural residents. Over 40 rural hospitals closed each year during the late 1980s, and the future appears to be even bleaker: Of the nation's 2,700 rural hospitals, approximately 600, or 22 percent, are considered to be at serious risk of closure.

But individual patients aren't the only ones at risk, for the link between health care and rural America goes beyond hospitals and patients and extends to the economic lifeblood of a community. Rural towns suffer deep economic wounds when their hospitals or medical care facilities close.

In the Ninth Federal Reserve District, where much of the population is rural (communities of 2,500 or less), a significant reduction in medical facilities could have a serious impact on those cities' economic health. In Minnesota, for example, 43 hospitals outside the Twin Cities metro area need tight financial monitoring, according to the Minnesota Health Department; of those, 21 are at high risk of closing. (Minnesota has 160 hospitals throughout the state.)

An economic conundrum

The Rural Health Research Center (RHRC) at the University of North Dakota, Grand Forks, reports that hospitals in smaller cities are usually the largest or second-largest employers.

"Because hospitals are important parts of the community economic system, a closure can result in population loss, revenue loss and a decrease in overall community income," says Jack Geller, director of North Dakota's RHRC. Geller says some studies suggest that rural hospitals are responsible for 25 percent of a community's employment.

But a hospital closure has more than just an immediate and devastating effect on a community, it may also mean doom for a town's economic future. As Geller puts it: "What kind of business wants to locate in a town without basic health care?" In other words, small towns need hospitals for economic growth, but they can't support the hospitals unless the growth is already there.

Last year the RHRC released a study of the effects of hospital closure on three Texas counties with varying degrees of economic strength independent of the hospital. In each case, employment, population, personal income, retail sales and sales tax revenues were reduced by closure, with those detrimental effects increasing slightly over time (the study projected to 1994). Also, by 1994, the loss of one hospital job ultimately meant the loss of nearly one-half of another job in the respective communities.

Charles Aagenes, assistant administrator in the Health Services Division of Montana's Department of Health and Environmental Sciences, says that some Montana counties are so determined to keep their hospitals open that the residents subsidize up to 50 percent of the hospital's operating expenses. And some of those counties have less than 2,000 people.

Physician shortage fuels health care problem

"Additionally, the closure of a hospital is often followed by the departure of the community's physicians," Geller says. Many physicians believe the loss of a hospital hinders their practice and they decide to move elsewhere, he says. And physician placement—not to mention nurse and other medical personnel—is a severe problem for many rural areas.

The National Governors Association reports that urban areas have 1.5 physicians per 1,000 residents, rural areas have 0.67. Worse yet, by 1995, one-quarter of rural physicians are expected to retire.

"The shortages are so bad in places that hospitals have had to close because of lack of staff," says Marianne Miller, director of the Health Economics Program for the Minnesota Department of Health. There are many reasons for the lack of physicians in rural areas, Miller says, but they primarily concern lifestyle, working conditions and pay. Being the only physician in a rural area means you are literally on duty 24 hours a day, seven days a week, Miller says.

Also, rural physicians often work without the benefit of the newest and most expensive equipment available to their urban counterparts, who also happen to earn more money (and for young doctors with high student loan obligations, money is an important consideration). In addition, Miller says rural physicians often feel ostracized from the rest of the medical community and they often desire to be in closer association with their professional peers.

"Attracting physicians to rural areas is a tough sell," Geller says, "and it's getting tougher." Some communities go to great expense to find physicians, flying to meet with prospective candidates in other states, and then flying those candidates back to the rural community for further discussions.

Some Montana towns provide tax subsidies to physicians who will establish a new practice, according to Aagenes. Also, towns in some states adopt a prospective physician while he attends school, paying all or part of the student's tuition for a guarantee of service. Some federal programs offer similar incentives (see related listing of federal programs, below).

"Of course, every other state is competing for the same physicians," Aagenes says. He also adds that many young physicians who come to a small town stay for just a few years, prompting many consumers to voluntarily travel long distances to larger towns in order to have consistent care with the same doctor.

Economic realities vs. physical needs

In acknowledgment of a medical personnel shortage and the economic consequences of health care availability, Montana has begun an experiment with new medical facilities geared toward rural areas that are termed as "frontier" (fewer than six people per square mile or 35 road miles from the nearest hospital).

Called medical assistance facilities, or MAFs, the "mini-hospitals" can perform some of the functions of a licensed hospital without having to meet all state licensing laws. For example, an MAF, which includes from two to five beds, need not be staffed by an on-site physician; rather, a physician assistant or nurse practitioner may run the site under the guidance of a physician who lives in another town.

Also, only on-call, not full-time, staff are needed at MAFs, which will probably be located adjacent to a nursing home, Aagenes says, so some medical personnel will always be nearby. Patients can only stay up to four days at an MAF, emergency patients are treated and sent as soon as possible to the nearest hospital, and other seriously ill patients are not admitted. There are other distinctions between MAFs and hospitals, but essentially Aagenes says their purpose is to ensure adequate health care access for all Montanans.

Originally passed into law by the 1987 Montana Legislature, the first MAF opened just months ago in Circle, a town whose 870 residents had to travel 60 miles to Glendive for medical care. The towns of Jordan and Ekalaka, population 500 and 620, respectively, are expected to open MAFs in the near future.

"Access doesn't mean that everybody has a doctor or hospital nearby," says Geller, of North Dakota's RHRC. He thinks plans, such as Montana's MAFs, are essential for rural America's future, adding that state licensing laws should be reformed to allow medical personnel other than doctors to provide some basic care.

In addition to the ills facing the entire health care system—such as the ranks of the uninsured and skyrocketing costs—rural areas, as mentioned above, must also contend with special problems of their own: a dwindling supply of customers, access problems caused by long distances between facilities, and an increasing reluctance of medical personnel to locate in rural communities. Rural America will continue to battle for its future health, both physical and economic, but Montana's Aagenes sees even gloomier times ahead: Decreases in population will fuel hospital closings, economic development will suffer, doctors who choose to practice in rural areas will continue to offer fewer primary care services (especially high-risk services like obstetrics), all of which will fuel more population declines: a vicious circle.

Federal programs to enhance rural health resources

  • National Health Service Corps — provides placement services, scholarships and educational loan repayment for physicians and certain other health professionals willing to serve in rural areas.

  • Federal Area Health Education Centers — links medical centers with rural practice sites to provide educational services and rural clinical experiences to students, faculty and practitioners in a variety of health professions.

  • Community and Migrant Health Centers — the federal government's most prominent endeavor to promote primary health care facilities in rural areas.

  • Primary Care Cooperative Agreements — federal government assists states that are assessing needs for primary health care and developing plans and information to address those needs.

  • Rural Health Care Transition — provides grants to small rural hospitals for strategic planning and service enhancement.

  • Other programs that provide grants to schools that educate and train primary care providers (for example, family practitioners, physician assistants and nurses).