In rural areas, small hospitals play a vital role in the health and well-being of the communities they serve. But the outlook for their survival is becoming bleak.
The North Carolina Rural Health Research Program reports that since 2005, a total of 183 rural hospitals have closed, more than half of this number (149) since 2010. Six were located in South Carolina.
The American Hospital Association and the National Rural Health Association estimates that there will be 660 rural hospital closures within the next three to five years.
And newly released data from the Center for Healthcare Quality & Payment Reform indicate that <<293 rural hospitals are at immediate risk of closure>> due to inflation, staffing shortages, increased regulations and other financial stresses. Seven of these are in South Carolina which represents 28% of the state’s rural hospitals.
The Abbeville Area Medical Center Board of Trustees is being proactive because we are committed to keeping quality, close to home healthcare in our County, and our best opportunity to ensure this is by affiliating with Self Regional Healthcare. We do not want our hospital to become a statistic.
~ Rod Boula, AAMC Interim CEO
Gene Pruitt, Chair of the AAMC Board of Trustees stated that the decision to pursue an affiliation was not taken lightly and was thoroughly researched and discussed by the AAMC Board of Trustees.
The challenges we faced during the COVID-19 pandemic further solidified the need to begin researching options including the possibility of affiliation. As a Board we wanted to be proactive and held a strategic planning retreat in the Fall of 2021 to discuss the future of our hospital.
~ Gene Pruitt, Chair-AAMC Board of Trustees
Steadily increasing costs of providing healthcare coupled with decreased & inadequate reimbursement rates, increased regulation & the inability of many to pay their bills have left hospitals both large & small looking for ways to survive.
Total margin reflects the excess or shortfall of total revenues (money made) to total expenses (money spent),
presented as a percentage of total revenue. The median is the midpoint of the data being measured, in this case
total margins. The graphic below shows that, during the most recent three years prior to 2020, South Carolina small rural hospitals’ total margins were negative, falling greater than 1% below the median of all small rural hospitals in the nation. Also, 2-3 small rural hospitals have closed since 2013.
Median Total Margin for Small Rural Hospitals and Number of Hospital Closures
Median total margin in most recent three years prior to 2020 for rural hospitals located in the state with less than $36 million in expenses. Closures are those reported by the Sheps Center for Health Services Research. States shown in gray have no small rural hospitals.
According to Becker’s Healthcare, over the last six years 14 out of 73 South Carolina hospitals (19%) either merged or affiliated with another hospital or were sold.
Affiliation is becoming more & more common &, according to leadership
from both Abbeville Area Medical Center & Self Regional Healthcare, will have very positive results both for AAMC & the community.
AAMC is experiencing many of the challenges facing small rural hospitals today including:
- Medicare, Medicaid and some commercial insurance reimbursement does not cover the actual cost of providing most healthcare services. Some reimbursement has actually decreased, further straining AAMC’s financial well-being. In many cases, hospitals are often forced to accept below average rates or are left out of commercial plan networks entirely.
- AAMC has experienced significant increases in “charity care” and “bad debt.” Charity care is awarded to those who have proven to the hospital through an application process they cannot afford to pay all or part of their bill. Last year, AAMC provided more than $961,000.00 in charity care and to date in 2023 has already given more than $869,000.00. Bad debt includes those who simply do not pay their bill. Last year, AAMC incurred more than $6.7 million in bad debt, which was 7.18% of its gross revenue. To date in 2023, the hospital has incurred almost $3 million.
- “Travel” staffing companies and larger healthcare systems began to offer lucrative compensation packages during the COVID-19 pandemic to attract staff. This has driven up costs to levels AAMC many times cannot match, making recruitment of some crucial positions difficult.
- Hospitals, no matter what their size, must comply with many complex national and state regulations that require additional staff and cost to meet the volume of required reporting. Examples include requirements for electronic medical records, access to online pricing transparency information, gathering and reporting of quality, disease and other data, physician credentialing, accreditation requirements, etc.0
The graph below shows that South Carolina ranks the worst in the nation for having the highest percentage of bad debt (non-payment of hospital bills) when compared to hospital’s total expenses.
Median Bad Debt as % of Expenses at Small Rural Hospitals
Median total margin in most recent three years prior to 2020 for rural hospitals located in the state with less than
$36 million in expenses.
After an intensive vetting process, the AAMC Board chose Self Regional Healthcare as its affiliation partner. Our two systems have common values and similar cultures. We were impressed with Self’s quality of care, fiscal stability, growth, wealth of service lines and management.
~ Rod Boula, AAMC Interim CEO
The AAMC Board’s vision is to expand & enhance healthcare in Abbeville County
to include the addition of a wide variety of specialty services, access to
state-of-the-art technology, benefits from shared cost savings, capital improvements & increased reimbursement rates with commercial payers.
Small rural hospitals like AAMC are the heart of their communities. We are a hospital family that cares for your family as if they were a member of our own, which provides a sense of belonging and trust to our patients. The leadership at Self Regional understands and values the quality personalized level of care for which we have become known and that our patients have come to expect. That won’t change when we affiliate.
~ Chris Ceraldi, MD, AAMC surgeon & Board member
- Rural Hospital Closures Threaten Access: Solutions to Preserve Care in Local Communities (American Hospital Association)
- Saving Rural Hospitals: The Crisis in Rural Healthcare (Center for Healthcare Quality & Payment Reform
- National Hospital Flash Report (Kauffman Report)