(April 2024) – The health care landscape is witnessing a concerning trend: the closure of hospitals across the nation, leaving communities vulnerable and increasing reliance on emergency medical transportation. This wave of closures has resulted in longer ride times for patients, leading to rising emergency medical transportation costs. According to the American Hospital Association, there are more than 5,100 community hospitals in the United States, with approximately 65 percent serving urban/suburban areas and 35 percent serving rural communities. Emergency rooms are critical to hospital operations, serving as the hospital's front door and accounting for more than 50 percent of admissions. However, 76 percent of community hospitals are owned by non-profit organizations or state and local governments, relying on external financial support to survive.1
During the past four years, more than 100 hospitals have closed, disproportionately impacting rural communities.2 Factors threatening the sustainability of health care facilities include high fixed costs, availability of skilled labor, reimbursement challenges and limited access to capital. Nearly 600 hospitals, one-third of rural hospitals, are at risk of closure due to these factors, with 50 percent at immediate risk due to financial reserves.3 Additionally, the availability of obstetric services is in decline, with more than 400 maternity services closing between 2006 and 2020.4 These types of closures result in longer emergency transportation times, negatively impacting health outcomes, especially for acute cases like heart attacks and trauma.5
The weakening financial position of the Medicare Hospital Insurance Trust Fund, the industry's largest payer at 26 percent of revenue, suggests significant Medicare legislation is likely in the next few years.6 These budget pressures, combined with the increasing Medicare population, strain facilities, staff and budgets, contributing to rising emergency medical transportation costs.7
The declining number of hospitals is one of the key factors behind rising emergency medical transportation costs. The very nature of hospital operations (high fixed costs, multiple service lines) favors larger facilities to address the need for larger service areas. Further exacerbating closures are Medicare's declining solvency, the hospital industry's narrow margin for error and significant adverse changes in the operating environment (such as a pandemic, severe economic downturn, etc.). This combination of pressures will likely lead to further hospital closures in the future.
To learn more, read the whitepaper, Hospital Closures Limit Access to Care.
Sources:
1: American Hospital Association, “Fast Facts on U.S. Hospitals,” 2024
2: American Hospital Association, “Fast Facts on U.S. Hospitals: Infographic,” 2023
3: Center for Healthcare Quality and Payment Reform, “Rural Hospitals at Risk of Closing,” 2023
4: JAMA Health Forum, “Maternity Care Deserts in the US,” 2023
5: Definitive Healthcare, “A look at hospital operating margins in the United States,” 2022
6: Medicare Hospital Insurance trust fund data: 2023 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds and Congressional Research Service; Medicare: Insolvency Projections.
7: Health Management Associates, “CMS releases national healthcare expenditure and enrollment projections through 2031,” 2023