Rural America’s Health Crisis: Critical-Access & Safety Net Hospitals

*Updated September 2019

It isn’t difficult to find a rural region in the United States—over 70 percent of the country is categorized as a non-metropolitan area. But only between 15 and 20 percent of the U.S. population, approximately 42 to 57 million people, live in a rural county. Sprawling acres of land and low population density make it difficult for many rural communities to attract businesses and therefore more people, either as residents or tourists.

This reluctance by big businesses to build or relocate to rural areas is one of many factors in the cycle of falling employment rates, rising poverty rates, and a lack of opportunity that drives younger residents to urban and metropolitan areas. Because of these and other factors, rural populations are more likely to live under the federal poverty line, face homelessness or housing insecurity, suffer from preventable and chronic illness, and lack health insurance coverage.

People living in rural areas are particularly susceptible to treatable illnesses like diabetes or depression. Rural populations are also older on average than urban populations and are more likely to suffer from illnesses associated with age, tobacco use, and cancer. Opioid-related deaths are also 45 percent higher in rural regions than in urban regions. Despite the high level of need for more than 40 million people living in rural America, they have less access to quality medical care than those living in metropolitan areas.

Definitive Healthcare currently tracks the financial and quality metrics of 4,477 active rural health clinics (RHCs) and 1,346 active critical access hospitals (CAHs). Of these CAHs, over 1,250—more than 93 percent—operate in rural areas. Despite the seemingly high number of available healthcare providers, this data does not account for the financial and physical restrictions these small rural facilities face.

Additionally, though critical-access hospitals are often referred to as “safety nets,” they should not be confused with safety-net hospitals (SNHs). While both CAHs and SNHs provide care to vulnerable populations—uninsured or impoverished communities—they have very different operating specifications.

Critical-Access Hospitals

Critical-access hospitals (CAHs) are defined by the Centers for Medicare and Medicaid Services (CMS) as facilities that:

• have fewer than 25 acute care inpatient beds
• are located more than 35 miles from the nearest hospital (or 15 miles by mountain or secondary roads)
• maintain an average stay of 96 hours or less
• must provide 24-hour emergency care services

Approximately 25 percent of acute care hospitals are designated critical-access hospitals. Because of this designation and the areas in which they are located, CAHs frequently have less access to funding, employ fewer physicians, and lack care specialists compared to other acute care hospitals. Additionally, due to the limitations of their critical-access status, CAHs are less likely than other acute care hospitals to have an on-site intensive care unit (ICU), offer cardiac catheterization, and have sufficient (if any) designated surgical facilities.

Of the 1,346 critical-access hospitals tracked by Definitive Healthcare, 47 have fewer than 10 beds and 17 have 5 beds or fewer.

Only half of those CAHs reported being part of a hospital network, further reducing the care options available to their patients. In addition, the mortality rate at critical-access hospitals is higher than at small rural hospitals not designated as critical-access. This is likely attributed to a combination of factors including limited access to capital, lower physician and specialist employment, and patient demographics.

Due to the financial burdens placed on critical-access hospitals, CMS reimburses their Medicare costs at 101 percent. However, this still is not enough for many CAHs, and most carry millions of dollars—sometimes tens of millions of dollars—in bad debt. These financial hardships make it difficult for critical-access hospitals to keep up with other hospitals, and still some cannot afford to update EHR systems or to implement them at all.

Rural health clinics, unlike CAHs, primarily rely on physician assistants (PAs) and nurse practitioners (NPs) to provide medical care for Medicare and Medicaid patients, and are reimbursed regardless of whether they operate under a full-time physician. RHCs receive enhanced Medicare and Medicaid reimbursement rates, and encourage the utilization of mid-level providers. However, they may be subject to reimbursement caps per patient visit—which can lead to very strict budgeting measures—and they are not required to offer inpatient services. Additionally, RHCs cannot operate in an area with more than 50,000 residents.

CAH’s do not have a limit on how many residents they can serve in their area, so long as they meet the geographical requirements. But this does not mean they face fewer financial difficulties. According to Definitive Healthcare’s database, of the 1,100 critical access hospitals reporting in 2018, nearly 450 of them claimed a debt-to-equity ratio of 0.5 or above, with an average rate of 1.59—a change from the average rate of 2.39 reported by CAHs two years ago. While this change represents an improvement in hospital financials, critical access facilities still have a long road ahead.

For many people living in rural communities, CAHs are the only reasonable option for medical care. In an emergency, patients may not be able to drive 35 miles or more to the next closest facility. People often cannot afford the cost of transportation or to take time off work to travel so far away for preventative care or treatment. Even veterans, who disproportionately live in rural regions, cannot access VA hospitals and other care facilities, and instead rely on local hospitals—which are often designated critical-access.

Despite the existence of these CAHs, rural patients are still not able to receive adequate medical care, particularly for cancer treatments and preventative medicine. Unlike many urban areas, rural counties are less likely to have safety net providers—which are better equipped to treat patients who are chronically-ill, uninsured, or are covered by Medicare.

To further compound this healthcare crisis, the number of critical access hospitals is steadily declining just as the number of uninsured Americans is rising. Since this article was first published, 30 facilities have permanently closed and another 20 have cut valuable services due to lack of funding and low patient volumes. The services most affected are labor & delivery, emergency, inpatient services, and home health services.

Safety Net Hospitals

Safety-net hospitals (SNHs) are hospitals with the highest number of inpatient stays that were paid by Medicaid or were uninsured. Only hospitals in the top quartile are designated as an SNH. As of the U.S. Census Bureau’s 2018 report, nearly 30 million Americans do not have health insurance, and therefore cannot or would not be treated at traditional hospitals.

Although SNHs, by definition, only represent one-quarter of hospitals in the U.S., they account for one-third of all inpatient stays. In 2016, half of these were paid by Medicaid or were uninsured. Safety-net hospitals are often large teaching hospitals located in urban areas. This is quite the opposite of critical-access hospitals, which can only exist in rural areas and service a small number of beds.

Like at CAHs, the backgrounds of patients seeking treatment at safety-net hospitals often lead to less favorable outcomes than the average patient. Because SNH patients are often living below the poverty line, they are at a higher risk of suffering from chronic health problems and untreated medical conditions, as well as a higher mortality rate within 30 days of treatment. This leads to complications when safety-net hospitals report quarterly quality metrics to CMS.

The disproportionate number of high-risk patients skews individual hospital data, often putting safety-net hospitals in the lowest quality performance percentiles. In turn, SNHs are more likely than traditional hospitals to receive quality metrics penalties from CMS—damaging their reputations and eliminating much-needed funding.

For vulnerable populations, especially those in rural areas, it can be immensely difficult to receive the proper preventative, diagnostic, and emergency care. Critical-access and safety-net hospitals provide essential healthcare services to those in need, or can stabilize and transfer patients that cannot be treated on-site. Because safety-net facilities are much less common in rural communities than in metropolitan areas, the burden primarily falls on critical-access facilities.

Though critical-access hospitals are necessary in many rural communities, they cannot always provide the same level of care as safety-net hospitals, due to smaller facility size and fewer staff members. Though rural health clinics can aid CAHs in patient care, they are only required to offer outpatient and laboratory services—leaving CAHs to care for most inpatient procedures, stabilizations, and transfers.

Additionally, as SNHs treat patients who cannot always pay out-of-pocket expenses, they rely on Medicare as their primary source of funding. This is also true for CAHs, due to their reimbursement percentages. Now, with the current debates over healthcare legislation and the hold on Medicare expansion, the fate of safety-net and critical-access facilities are even more uncertain.

There is already a disparity between urban and rural healthcare quality and access. It seems as though this healthcare crisis may continue, especially if more Americans are left without health insurance.

Definitive Healthcare has the most up-to-date, comprehensive, and integrated data on hospitals, physicians, and other healthcare providers. Our database tracks financial and quality metrics for over 1,300 critical-access hospitals and 4,400 rural health clinics, and regularly integrates CMS report data.