One-third of Missouri’s Rural Hospitals at Risk of Closure

One-third of Missouri’s rural hospitals are at risk of closing, according to a report using newly-updated federal data.

A July report from the Center for Healthcare Quality and Payment Reform (CHQPR), a national policy group, found that 19 of Missouri’s 57 rural hospitals are at risk of shuttering because of “serious financial problems.”

Many of those hospitals at risk of closure could sustain themselves financially for six to seven years, according to the report. 

Eight rural hospitals, however, are in particularly dire straits, according to the report, and are at risk of “immediate closure” — meaning they are at risk of closing in the next two to three years. That is up from only two rural hospitals at risk of immediate closure in the previous year’s report.

The center evaluates a hospital’s risk of closure by measuring how long it could sustain itself based on the most-recently available financial data — tracking whether hospitals are losing money on patient services and whether they have the reserves to offset those losses. 

Harold Miller, CEO and president of CHQPR, said the issue of struggling rural hospitals in the state should be considered “very urgent” and is worsening nationally.

“These hospitals in many cases, particularly the very small hospitals, are the only provider of health care services in the community,” Miller said.

That means rural hospitals sometimes provide services as wide-ranging as emergency care, primary care, lab testing and maternity care.

“If this hospital closes in these communities,” Miller said, “they may lose everything.”

The state’s 57 rural hospitals are providers located outside the 34 counties that make up Missouri’s metropolitan statistical areas. Ten rural hospitals in Missouri have closed since 2012. 

Those that remain open, but are faltering, often consider cutting services in an attempt to remain afloat — gradually chipping away at care as the prospect of closure looms.

Cox Monett Hospital, in Southwest Missouri, announced earlier this year its plan to close its inpatient labor and delivery this summer, citing difficulty recruiting doctors. Some patients would need to travel upwards of 45 minutes from Monett to Springfield to access obstetric care, KY3 reported.

In 2020, almost half of rural community hospitals nationally did not offer obstetric care, according to the American Hospital Association. Studies have found a higher risk of complications for those giving birth in rural areas.

The last year of inflation and a tight labor market, along with the end of COVID federal grants, contributed to hospital losses increasing, Miller said. Many rural hospitals lost more money in 2022 than in pre-pandemic years, he said.

The latest Center for Healthcare Quality and Payment Reform report, released in July, includes data most hospitals submitted about their performance in 2022. The report uses data from quarterly cost reports to the federal Centers for Medicare and Medicaid Services.

Several rural hospitals in Missouri identified the loss of federal COVID aid as particularly difficult last year, in an investigation by The Independent.

One rural hospital, Scotland County Hospital in Memphis, Missouri, received over $10 million in federal aid because of COVID-19 but then struggled to overcome losses last year. The hospital has considered cutting back on inpatient services and maternity care. 

Scotland County Hospital had, on average over the last three years, a total margin of -8.5%, and a margin on patient services of -21.6%, according to CHQPR’s data. That means the costs the hospital paid to operate exceeded the revenue they brought in: They were losing money to run.

Another rural Missouri hospital, Hermann Area District Hospital, had positive cash flow from federal COVID aid, but by late last year was forecasting “tough times.” 

“We are back into losing over $1 million this year,” hospital Administrator Dan McKinney, said in a November interview with The Independent, citing personnel costs and difficulty attracting workers.

Even aside from economic conditions — including inflation and the tight labor market — rural hospitals have long been struggling to stay afloat. 

Rural hospitals serve smaller populations than their urban counterparts, but have many of the same fixed costs, such as staffing emergency rooms. They generally have limited power to negotiate reimbursement rates from insurers.

The Center for Healthcare Quality and Payment Reform advocates for increased payments from private health insurers as one solution, arguing that payments aren’t sufficient in rural regions — especially for primary care and emergency services.

Miller said he hopes the report demonstrates the need for something to be done “more systematically” to solve the financial problems of rural hospitals — and to point out that it’s not just “individual hospitals” at risk but a widespread phenomenon in the state.

“In an urban area, people are used to having multiple choices: If a hospital closes, I’ll go to a different hospital,” Miller said. “But in some rural areas, well, there is no different hospital. There’s only one.”

Clara Bates covers social services and poverty for the Missouri Independent, where this story first appeared.