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Hospitals continue to shut down in rural America

When states opt out of Medicaid expansion, many rural communities soon find their local emergency rooms shuttered

When Pungo Hospital, the only emergency health facility in Belhaven, North Carolina, closed its doors earlier this July, barely anyone outside this coastal community took notice. But for the town’s mayor, Adam O’Neal, the shutdown was a matter of life and death.

“Our health and well-being depend on this hospital,” O’Neal said, as he was gearing up for a town council meeting.

Pungo Hospital provided health services to 25,000 people in two of North Carolina’s poorest counties, Beaufort and Hyde. Vidant Health, a nonprofit network that owns hospitals and clinics in eastern North Carolina, decided to replace Pungo with a 24/7 urgent care clinic offering treatment for minor illnesses and non-life threatening injuries. If the clinic cannot serve their needs, Belhaven residents will now have to travel 30 miles to the next closest hospital.

On July 1, Pungo Hospital in Belhaven, North Carolina, closed, leaving the town's more than 1,500 residents a 30-minute drive away from a proper emergency room.
Eric Byler/StoryofAmerica.org

This can be problematic. “If someone is having a stroke, it's probably not good to have another half-hour drive before you can get treatment,” O’Neal said.

But it turns out that Belhaven’s experience is far from unique.

Across the country, many rural hospitals are closing down, according to the National Rural Health Association. In 2013 alone, 14 rural hospitals shut down nationwide, leaving whole communities without quick access to emergency care.

That’s not just a healthcare problem; it is an economic issue too. In addition to healthcare services, research shows rural hospitals contribute significantly to local economies. They bring outside dollars into rural communities and stimulate local purchasing power while they help attract industry and, in some locales, a steady flow of retirees.

The 50-bed Pungo Hospital was the largest employer in the predominantly African-American community of Belhaven. It represented roughly 10 percent of the funds the town received each year by providing utilities such as electricity to its residents and businesses, said Town Manager Guinn Leverett. Belhaven is now considering raising property taxes by 10 percent to make up the loss of that revenue.

While there seems to be consensus that the increasing rate of hospital closures in rural America is alarming, there isn’t much agreement on the causes. Some health experts say it’s the fallout of health care’s transition from a cost-based model to pay-for-performance, which aims to improve the quality and outcomes while lowering costs. But many others put the blame on shifting demographics, sharp cuts to federal reimbursements, dwindling numbers of insured patients and congressional gridlock in Washington, D.C.

The closure of Pungo Hospital is in part due to North Carolina’s refusal to expand Medicaid, Vidant Health said in a statement. Other considerations, including the failing state of the 60-year-old facility also contributed to the decision to close it. The hospital ran close to a $1.8 million deficit last year—although it’s unclear what caused the shortfall. Repeated attempts to contact Vidant about the deficit went unanswered.

The sign placed outside Pungo Hospital when it closed on July 1.
Eric Byler/StoryofAmerica.org

Like other rural hospitals across the country, Pungo had long relied on subsidies to facilities serving areas with high numbers of Medicaid patients and uninsured people to make up for the dwindling number of patients staying overnight and for the rising cost of providing services to indigent patients. However, now that President Obama’s Affordable Care Act (ACA) has gone into effect, those funds will be significantly reduced. At the time of the bill’s passage, health officials assumed that millions of uninsured Americans would gain coverage through the new law or through expanded state Medicaid programs.

But as portrayed in this week’s episode of Fault Lines, “The Coverage Gap,” North Carolina is one of 21 states that have so far opted not to expand Medicaid, thereby turning down millions of dollars annually in federal funds. States that don't expand Medicaid will miss out on a total of $88 billion through 2016, according to a July 2 report from the White House Council of Economic Advisers.

North Carolina Governor Pat McCrory's refusal to expand Medicaid was made possible by a Supreme Court ruling that gave states the option to opt out. The ACA allows states to expand their Medicaid programs to anyone whose income is below 138 percent of the federal poverty level, which is currently just over $15,000 for a single person. Despite the federal government offering to cover the cost of newly eligible enrollees through 2016 (and 90 percent of their costs thereafter), Republican governors, including McCrory, argue that expansion would be too costly for their states in the long run.

States’ decisions to opt out of the expansion have put tremendous pressure on rural hospitals, said Christopher Coleman of the Tennessee Justice Center. In his home state, 28 rural hospitals face major budget cuts or closure. Many have already cut down on services and significantly reduced staff.

For instance, Haywood Park Community Hospital in Brownsville, Tennessee, announced in April that it would end inpatient and emergency room services on July 31 because of the state’s failure to expand Medicaid coverage. The 62-bed west Tennessee hospital will become an urgent care clinic. This will leave virtually all of Haywood County’s nearly 19,000 residents without access to a local emergency room. The nearest ER will be 25 miles away in the town of Jackson.

Protestors in Atlanta vilify Georgia Governor Nathan Deal for his decision not to have the state participate in Medicaid expansion.
Martin Asturias for Al Jazeera America

Coleman warned that if the state continues to reject Medicaid expansion, more hospitals will close, ultimately leaving several other Tennessee counties without hospitals.

In Georgia, which also is not expanding Medicaid, four of its 65 rural hospitals have shut down over the past two years. As many as 15 more may be closing due to shrinking budgets and razor-thin government reimbursements, according to Hometown Health, a trade association that represents 56 hospitals in rural Georgia.

In Alabama, six rural hospitals have closed in the past 18 months and 22 more are facing serious financial shortfalls. Meanwhile, the state’s Republican governor, Robert Bentley, continues to reject the expansion of Medicaid.

Back in Belhaven, Mayor O’Neal said he wants to see Pungo Hospital reopen immediately “…to save lives.”

O’Neal is now planning to walk the 273 miles from Belhaven to Washington, D.C., beginning on July 14, to “raise awareness about rural hospital closures in America.” He is determined to take his message to lawmakers in D.C., whom he said have failed to adequately address the healthcare issue in rural America because of partisanship.

“When the issue is vetted, and people know all about this issue, there aren’t a lot of common sense reasons not to accept expansions of Medicaid,” he said.


In "The Coverage Gap," Fault Lines examines a new dichotomy in U.S. health care—where poor residents of some states have no access, while those in other parts of the country do. The film airs on Al Jazeera America Saturday, July 12, at 7 p.m. Eastern time. It will air again that evening at 10 p.m. Eastern and Sunday, July 13, at 2 a.m. Eastern.   

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