Alan Morgan [00:00:03]:

Everyone loves rural hospitals. Now the challenge is, is how do we share that? For these rural hospitals to be successful, we need to make sure that the tax credits continue. We need to make sure that Medicaid is funded. We need to make sure there’s no cuts to Medicare. I know everyone says they love us, but now they have to tie these policies to their love.

Narrator [00:00:29]:

Welcome to Hospitals in Focus from the Federal Federation of American Hospitals. Here’s your host, Chip Kahn.

Chip Kahn [00:00:38]:

Rural America is stressed today. It is becoming increasingly difficult to ensure rural Americans health care within 30 minutes or 30 miles of home. We’re going to hear that the drastically changing demographic and economic landscapes in small town America are affecting the sustainability of local hospitals and access to many critical medical services. Medicaid plays a crucial role in rural health care. More than 12 million rural Americans rely on the program, and nearly half of all babies born in rural areas are covered by Medicaid. Additionally, enhanced tax credits on the exchanges have given more rural families the opportunity to purchase individual coverage, providing a vital safety net and access to care. However, ongoing threats to Medicaid funding and the uncertainty surrounding these tax credits put rural Americans at greater risk. So what’s next for rural healthcare and rural hospitals? How can we ensure these communities continue to receive the care they need? Joining hospitals in focus again is Alan Morgan, CEO of the National Rural Health Association.

Chip Kahn [00:01:54]:

He’ll break down the challenges, the policy landscape, and what must be done to protect health care in rural America. Thank you so much for joining us today, Alan.

Alan Morgan [00:02:04]:

Chip, thanks again for having me back. I got to tell you, I always appreciate the strong partnership between the Federation and the National Rural Health Association. I just wish we were able to talk under more a better environment than what we were looking at right now.

Chip Kahn [00:02:20]:

I guess that’s why when we took our jobs, we knew the job was dangerous when we took it.

Alan Morgan [00:02:26]:

I guess so.

Chip Kahn [00:02:27]:

So let me lead into the basics here. Alan, how would you characterize the current status of rural healthcare? Whether it’s the hospital or the physician’s office, what’s defining in a community, whether it’s a small town or a big city, it’s the schools, it’s other services, and it’s medical care. And that usually means a hospital, a doctor’s office, access to the kind of care that a community needs. It’s defining. And yet what’s happening in rural America?

Alan Morgan [00:03:00]:

Yeah, this is an incredibly, incredibly challenging time for health care in rural America. We’ve got multiple threats at this point and it’s. We’ve always faced workforce challenges that’s kind of a synonymous for what it is to be in a rural community. And we’ve had access to care issues and we’ve had a population that’s have higher chronic care issues. It’s elderly, lower income. But I gotta tell you, all the additional new threats that are facing rural hospitals today just make this an exceptionally dangerous and difficult time.

Chip Kahn [00:03:39]:

Let’s sort of go through the numbers. I know that you all at the National Rural Health association track the status of hospitals. Can you give us sort of a lay of the land across the country about what we’re seeing?

Alan Morgan [00:03:52]:

Yeah, the numbers tell a story of what these rural communities are seeing. Chip, since 2010, we’ve seen 152 rural hospitals close. And we’ve seen, gosh, it depends on, I think we’re up to 42 of these hospitals have converted to what we call rural emergency hospitals. And we’ll talk a little bit more about that. But while on one hand that’s a great opportunity to maintain 24,7 access to emergency care, you’re losing that inpatient care. And that’s never the direction you want to go for a rural community. So again, you’ve got these hospitals are closing. And it’s not just the hospitals you’re talking.

Alan Morgan [00:04:35]:

Sometimes EMS goes along with that, sometimes long term care. Rural hospitals are community assets and oftentimes when that rural hospital closes, the community eventually follows. So it’s not the direction we want to see rural communities going.

Chip Kahn [00:04:51]:

Give me a sense for the demographics that are playing out here because I know in terms of the hospitals that belong to our association, other rural hospitals, there’s been this dramatic shift over time where they have a lot more patients on Medicaid, many more patients on Medicare, and that’s taking up a greater proportion of their overall mix of patients. What’s changing in the demographics of rural America that’s leading to that?

Alan Morgan [00:05:20]:

Yeah, older, sick or poor. That is a great elevator speech when you’re meeting with members of Congress. It’s a terrible marketing speech when you’re trying to get clinicians into these rural communities. But it’s older, sick or poor. It’s not unusual to see a rural hospital with inpatient patient mix of 70% of Medicare, Medicaid up to their inpatient volume. So you’ve got, you have to have a good partnership with the state and federal government to keep access to care there.

Chip Kahn [00:05:51]:

Now, obviously the United States is a massive country and rural Alabama isn’t necessarily rural. Montana, in terms of the kind of issues we’re talking about now, are there Differences. Are there some areas of the country that are doing better? How would you characterize this? Because there are great differences. You know, some places you’re X miles away from the next city, in other places you’re Y so miles away. So in terms of rural America, is this pervasive or is it limited to certain types of characteristics of certain areas?

Alan Morgan [00:06:29]:

Yeah, all of rural America suffers from workforce shortages and a vulnerable population. So that’s an easy statement. But when you get down to it, and I think this is so important in the Medicaid discussion we’re talking about, the bulk of rural hospital closures to date have happened in the southeast of us. Now when people talk about rural hospital closures that a lot of times they just dismiss it as well. These are low volume facilities and you know, people are moving away from rural and well, maybe management’s not as good in these rural facilities. Those are just fallacies. None of those are correct. The data doesn’t match it.

Alan Morgan [00:07:07]:

What’s happening is we’ve clustered low income populations in small communities with the inability to pay and now we’re forcing these rural hospitals to pick up the tab. And when you are operating at a slim profit margin, in many cases, well, it’s up to 48% of rural hospitals currently are operating at negative margin. You can’t take the bill for all these high health needs community populations without the ability to pay. And then you plow into the situation, as you know all too well where on Capitol Hill they’re talking about cutting Medicaid. So we’re heading in the wrong direction.

Chip Kahn [00:07:47]:

Well, we have policy in Medicare, we have Medicare dependent hospitals, we have low volume hospitals in, we have various Medicaid policies, Medicare disproportionate share and others that are really critical path. But right now, how would you characterize the strength of these programs and also other programs that are meant from a health policy standpoint to support the rural infrastructure?

Alan Morgan [00:08:14]:

Yeah, all these policies work together to the point that you made at the beginning. You know, you’ve seen one rural community, you’ve seen one rural community. And for some of these communities, for some of these facilities, Medicare dependent hospitals is that program and payment is of paramount importance. So community is of paramount importance. The critical access hospital program, the rural emergency hospital, the tax credit issue as well is incredibly important. These are a patchwork of federal responses to ensure access to care. And they work. They have worked.

Alan Morgan [00:08:54]:

And especially since falling coming out of COVID we’ve seen a stabilization. But I’m afraid that right now we’re pulling Those safety nets programs. And I’m really concerned about what this means for the future of rural hospitals.

Chip Kahn [00:09:08]:

And let’s talk about the threats. I mean, obviously through our conversation it’s sort of been Medicaid, Medicaid, Medicaid. And I know state directed payments and other programs are just critical, particularly in that area that you talked about in southeast of the United States. What would you characterize considering the new administration, the new Congress as your primary challenges from the standpoint of what your association’s working on?

Alan Morgan [00:09:35]:

Well, communication is going to be front and center on this and it’s a good news, bad news issue. And Chip, you saw the confirmation hearing of Secretary Kennedy for Secretary of hhs when Secretary Kennedy was confirmed, he made the point that it is a bipartisan support. There is bipartisan support for rural hospitals. And the administration puts a paramount on rural hospitals. The first Trump administration, you know, they put a paramount focus on rural hospitals. Everyone loves rural hospitals. Now the challenge is, is how do we share that for these rural hospitals to be successful, we need to make sure that the tax credits continue. We need to make sure that Medicaid is funded.

Alan Morgan [00:10:23]:

We need to make sure there’s no cuts to Medicare. I know everyone says they love us, but now they have to tie these policies to their love. And I think that’s the challenge that we’re at right now.

Chip Kahn [00:10:34]:

Have you done any assessment of what, you know, a Medicaid cut of hundreds of billions of dollars would do? Do you have any sense for that?

Alan Morgan [00:10:42]:

I do. And you might have saw my quotes in the Washington Post this week on this issue. It’s not a question of if Medicaid cuts will close rural hospitals. It is a fact that Medicaid cuts will result in hospital closures. It’s just a question of how many. That is a fact. So there’s no ifs, ands or buts or it could result. And I just saw a headline on the news that these cuts may close rural hospitals.

Alan Morgan [00:11:11]:

That’s inaccurate. It will result in these closures. And I say that, Chip, because under our data analysis, we show up to 450 rural hospitals at risk foreclosure. There was another study that was just published last week that had that pegged that number up in the 700s, 400, 700, it doesn’t matter. These are facilities that are providing life saving care for these communities that are on the cusp of closure. So anytime you take federal, state, local support away from these facilities, it’s an issue of math.

Chip Kahn [00:11:49]:

Just to give some sense of scale in Terms of those numbers, what’s the total number or the total N for hospitals that you consider to be rural? I know in Medicare the Brigham is considered a rural hospital. And I, last time I was in Boston I didn’t see cows in the park across the street. But in terms of actual rural hospitals, what proportion did you just described could potentially close?

Alan Morgan [00:12:15]:

I love that story, Chip. You know, I like to say we’re all, we are all rural at heart when it comes to federal payment. You know, everyone, everyone wants to be rural, but the fact of the matter is there’s roughly 2,000 out there that are actually rural. You’re Talking about about 1100, I think, that are critical. I mentioned the 60, 40 to 60 that are rural emergency hospitals and the rest are rural PPS hospitals. Those rural prospective payment hospitals, you know, they’re going to range from, there are some that are lower than 25 beds, but you have some that are up to over 200 beds as well too, but roughly speaking, around 2,000. So when you’re talking about 700 at risk, you’re talking about almost half of the nation’s rural hospitals at risk for closure.

Chip Kahn [00:12:59]:

So that’s massive. But then the other aspect of this is services, because even if a hospital remains open, I was reading an article this morning about a rural hospital that was just on the verge of closing its obgyn, its birthing services because it lost money on it and it just, it wasn’t something they could just keep open. Considering that almost half the births are Medicaid related, how do you see that impacting even beyond just this 4 to 700 that might close if we get severe Medicaid reductions.

Alan Morgan [00:13:31]:

Yeah, let’s back up a little bit. And for a rural community to survive and thrive, you have to have that access to maternity care for young families to move in and stay in those communities. You have to have access to Medicaid for that. And you also have to have access to Medicaid for senior care on the other end of that. So it’s a question of how do we keep our elderly housed in those rural communities and how do we attract and retain the young families to come in. And that makes the case for the economic importance of these rural hospitals, which in many cases are these towns or county’s largest employers.

Chip Kahn [00:14:15]:

A lot of problems, but let’s sort of look out sort of to conclude into the Future and let’s five years from now, 10 years from now. I know the 10 year question is that’s a awfully long period. Where do you see Rural healthcare going, considering what we know now, at least over the next five to ten years.

Alan Morgan [00:14:35]:

Whew. Yeah. So far, our conversation, this has been one of the most depressing conversations I’ve had with you, Chip, over these years. And there’s a lot of obstacles, I do want to say, in light of this. I mean, we are seeing great successes out there. Our facility of the year, or organization of the year, Columbia Memorial Hospital in Astoria, Oregon, is just doing a fabulous job out there building a new facility, going to triple the amount of services that they can provide. So we have success. And, you know, all across, there’s.

Alan Morgan [00:15:10]:

There’s a lot of examples of that out there. But to your question, where do I see rural hospitals in five to 10 years? And, Chip, I’m having a bad case at deja vu. You may not remember this, but 15 years ago, you and I were at a meeting at the White House. I don’t even remember why, but I remember the conversation. And at that time, the environment for rural hospitals was just terrible. And we were talking about that. And I remember it because that was the beginning of the rural hospital closure crisis. After that conversation, we saw the uptick and we saw 150 rural hospitals close their door.

Alan Morgan [00:15:49]:

I’m having vu when you talk about all these pending threats to rural hospitals. And on the cusp of a potential recession on top of that, I’m afraid the next five to 10 years, we’re going to see a return to the number of rural hospital closures that we saw in the late 2000s and 2000s around there. So it doesn’t bode well. I want to end this, though, on the conversation in disparate. Despite all these challenges, these rural hospitals, there are ones that are thriving and innovating, and I think we’re seeing some great approaches to community health happening out there across rural America.

Chip Kahn [00:16:30]:

Well, Alan, you know, thank you for this conversation and thank you for your service trying to help those in rural America get the healthcare they need and just appreciate what you do. And thanks so much, Chip.

Alan Morgan [00:16:41]:

Thank you so much for your support of rural hospitals as well the partnership and the friendship that we’ve had over these decades working here in D.C. on behalf of behalf of rural hospitals and hospitals in general.

Narrator [00:16:55]:

Thanks for listening to Hospitals in Focus from the Federation of American Hospitals. Learn more at fah.org. Follow the Federation on social media at @FAHHospitals and follow Chip @ChipKahn. Please rate, review and subscribe to Hospitals in Focus. Join us today next time for more in depth conversations with healthcare leaders.

Alan Morgan joined NRHA staff in 2001 and currently serves as Chief Executive Officer of the association.

Recognized as among the top 100 most influential people in health care by Modern Healthcare Magazine, Alan Morgan serves as Chief Executive Officer for the National Rural Health Association. He has more than 30 years experience in health policy at the state and federal level, and is one of the nation’s leading experts on rural health policy.

Mr. Morgan served as a contributing author for the publications, “Policy & Politics in Nursing and Health Care,” “The Handbook of Rural Aging” and for the publication, “Rural Populations and Health.” In addition, his health policy articles have been published in: The American Journal of Clinical Medicine, The Journal of Rural Health, The Journal of Cardiovascular Management, The Journal of Pacing and Clinical Electrophysiology, Cardiac Electrophysiology Review, and in Laboratory Medicine.

Mr. Morgan served as staff for former US Congressman Dick Nichols and former Kansas Governor Mike Hayden. Additionally, his past experience includes tenures as a health care

lobbyist for the American Society of Clinical Pathologists, the Heart Rhythm Society, and for VHA Inc.

He holds a bachelor’s degree in journalism from University of Kansas, and a master’s degree in public administration from George Mason University.