Report: Financial losses put 13 rural Florida hospitals at risk of closure

More than a dozen rural Florida hospitals are at a risk of closing — some in as soon as two years, according to a new report. 

The report is from the Center for Healthcare Quality and Payment Reform, a national policy center focused on designing and implementing payment systems that support affordable, patient-centered health care. The report, overall on a national level, found that more than 700 rural U.S. hospitals are at risk of closure due to financial problems, with more than half those hospitals at immediate risk of closure. The report, using July hospital financial information from the Centers for Medicare & Medicaid Services, as covered by Becker’s Hospital CFO report, probes financial vulnerability of rural hospitals in two categories: risk of closure and immediate risk of closure.

The risk of closure is measured by financial reserves that can cover losses on patient services for six to seven years. In over half of all U.S. states, 25% or more of rural hospitals face this risk, with nine states having a majority of the rural hospitals in jeopardy, the Becker’s report states. In Florida there are 8 hospitals at risk of closing — 36% of all rural hospitals in the Sunshine State.

To gauge immediate risk of closure, the report looked at hospitals where “reserves could offset losses on patient services for two to three years at most,” Beckett states. The CHQPR report found 360 rural hospitals are at immediate risk of shutting down due to severe financial difficulties. That includes five in Florida. (The report doesn't name individual hospitals with the issues.)

Over the past decade, more than 100 rural hospitals have closed. Those closures put a strain on the rural community, in health care and the labor force, of course, but also on the more urban health care facilities that are already understaffed.

The main culprit for the closure crisis, according to the CHQPR analysis, is “private insurance plans are paying them less than what it costs to deliver services to patients. Although the at-risk hospitals are losing money on uninsured patients and Medicaid patients, losses on private insurance patients are the biggest cause of overall losses. Conversely, many other rural hospitals are not at risk of closing because they make profits on patient services.”

The report put forth three more possible reasons for rural hospitals to be in financial jeopardy:

• Losses on patient services: “The majority of rural hospitals in the country lose money delivering patient services,” the report states. “It costs more to deliver health care in small rural communities than in urban areas, and many health insurance plans do not pay enough to cover these costs.”
• Insufficient revenue from other sources to offset losses: “Many hospitals have managed to remain open despite losses on patient services because they receive local tax revenues or state government grants,” the report states. “However, there is no guarantee that these funds will continue to be available in the future or that they will be sufficient to cover higher costs. The special federal assistance many hospitals received during the pandemic has now ended. As a result, more than one-third of rural hospitals lost money overall in 2022-23.
• Low financial reserves: “The hospitals at greatest risk of closing,” the report states, “have more debts than assets, or they do not have adequate net assets to offset losses on patient services for more than a few years.”