Rural America faces a healthcare crisis that is both severe and escalating. Accounting for 46 million people¹—or about 14% of the U.S. population—rural communities experience disproportionate health challenges due to structural inequities in access to care. These regions see higher rates of chronic diseases, mental health challenges, preventable conditions, and worse outcomes for maternal and infant health. For example, rural mothers are twice as likely to die from pregnancy-related complications as their urban counterparts, and infant mortality rates are 20% higher in rural counties².
At the heart of this crisis is the financial instability of rural hospitals. More than half of rural hospitals in the U.S. no longer offer labor and delivery services, and many struggle to keep essential services running². These facilities often operate at a loss due to inadequate reimbursement rates from private insurers, with costs far exceeding revenue for essential care. The Center for Healthcare Quality and Payment Reform emphasizes that the primary cause of financial losses isn’t low Medicaid or Medicare payments, but rather insufficient payments from private insurers, which fail to cover the actual cost of care³.
The consequences of these closures are devastating. Entire communities are left without access to critical services, creating healthcare deserts where disparities deepen, and mortality rates rise. Residents are forced to travel greater distances for care, risking severe consequences in emergencies and reducing access to preventative treatment.
This is the backdrop against which the need for innovative solutions becomes clear. Ensuring rural hospitals remain open and well-funded is essential to providing high-quality, comprehensive healthcare, including mental health services, labor and delivery, specialty care, diagnostics, and primary care—all with shorter wait times and within a reasonable distance. Achieving this goal necessitates an adequate and reliable revenue stream to support these providers and services.
When it comes to closing the health gap in rural America, common solutions include provider education, policy advocacy, tackling social determinants of health, expanding telehealth, and diversifying the physician workforce. However, one crucial approach rarely takes center stage: strategic payer negotiation. Without it, all other efforts risk falling short. Why? Because an effective payer strategy can be the foundation for sustainable, equitable healthcare in rural communities.
Rural areas often face a vicious cycle, where small populations can’t generate the patient volume needed to sustain high-quality care infrastructure. This leaves rural hospitals financially strained, while health insurance companies view them as "expensive" outliers compared to their urban counterparts. Insurers push for lower payments and impose caps on reimbursement rates, forcing rural facilities to “cut costs” in ways that aren't feasible, given their fixed structural financial challenges.
The impact? Rural hospitals are closing at an alarming rate. Since 2010, more than 130 rural hospitals have shut their doors⁴, with many more at risk of closure. Residents lose access to care, are forced to travel greater distances, and suffer severe consequences in emergencies.
A focused payer strategy is the most effective way to secure sustainable revenue, keeping rural hospitals open and thriving to serve their communities.
Health systems must prioritize and negotiate with payers to secure sustainable funding that enables them to keep rural hospitals open and thriving. By shifting the focus toward strategic payer partnerships, a future can be built where rural healthcare survives to meet the needs of every community it serves.
It’s time to rethink what it really takes to solve rural health disparities. The answer lies not only in expanding resources but in leveraging payer relationships to fuel a sustainable, quality-driven rural healthcare infrastructure.
So, how can rural health systems take the first step toward ensuring financial stability and equitable care? By partnering with experts who understand the unique challenges of rural healthcare and can craft tailored payer strategies to meet their needs. At BDC Advisors, we specialize in helping rural health systems navigate these complexities, from developing comprehensive payer strategies to negotiating sustainable contracts that secure the future of their hospitals, and the health of their communities served.
What challenges is your system facing today, and how can we help you build a sustainable path forward? Let’s start the conversation.
Sources:
1. U.S. Department of Agriculture, Economic Research Service. The evolving role of income and wealth in rural America. Economic Information Bulletin No. 230. https://www.ers.usda.gov/webdocs/publications/102576/eib-230.pdf
2. Center for Healthcare Quality and Payment Reform. Addressing the crisis in rural maternity care. Retrieved from https://chqpr.org/downloads/Rural_Maternity_Care_Crisis.pdf
3. Center for Healthcare Quality and Payment Reform. Problems facing rural hospitals. Retrieved from https://ruralhospitals.chqpr.org/Problems.html
4. American Hospital Association. (2022, September 8). AHA report: Rural hospital closures threaten patient access to care. Retrieved from https://www.aha.org/news/headline/2022-09-08-aha-report-rural-hospital-closures-threaten-patient-access-care
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