Health Affairs, Commentary, June 14, 2021
Nearly 60 million rural Americans depend on local hospitals and their emergency departments (EDs) when serious (for example, trauma, stroke, heart attack) and potential (for example, chest or abdominal pain) emergencies occur. Yet, since 2010, 136 small and rural hospitals have closed. The COVID-19 pandemic accelerated this trend, with a record 20 new hospital closures in 2020 and many more at risk. Mortality worsens when hospitals close because of reduced access to the life-saving skills of emergency physicians and the hospitals where they work.
Recent policy initiatives have attempted to address rural hospital closures. Some Pennsylvania rural hospitals and all Maryland hospitals are funded through global budgets. Starting in January 2023, a new rural emergency hospital (REH) designation will allow rural critical access hospitals to convert to an REH and receive fixed payments to support infrastructure and a 5 percent increase in fee-for-service payments in return for maintaining an ED and specified outpatient services. A weakness of these models is that they focus on supporting the hospital facility alone. None ensure sufficient resources to pay for the 24/7/365 on-site emergency physician, plus some level of surge capacity, needed to provide ED patient care.
To understand why rural and small hospitals struggle to maintain high-quality emergency physicians in their EDs, it is important to describe the economics of ED staffing and how the COVID-19 pandemic changed those economics for the worse. Pre-pandemic, a delicate balance of volume, complexity, and payer-mix supported ED staffing with fee-for-service payments. Some visits reimbursed well and required few resources (for example, privately insured, low acuity). For other visits (for example, Medicare, Medicaid, high acuity, and uninsured), reimbursement did not cover costs. Medicaid expansion under the Affordable Care Act reduced uninsured visits but has been no panacea. Medicaid expansion replaces unreimbursed visits by uninsured patients but only with well-below-cost Medicaid rates. Expansion also generates payer crowd-out: Some visits, previously well-reimbursed by commercial insurance, become low-paying Medicaid visits.