HEALTH
Why So Many Hospitals Have Gone Out of Business 76 hospitals have completely shut down since 2011, including 20 in 2020 By Deborah Jeanne Sergeant
I
t seems nonsensical that hospitals should close. After all, there’s no shortage of people sick or injured. But the Cecil G. Sheps Center for Health Services Research reports that since 2011, 76 hospitals have completely shut down, including 20 in 2020, the highest number ever. Most of these facilities are in rural areas, which may sound like few people need them. However, 60 million people — almost 20% of the American population — rely on these providers for care. George W. Chapman, owner of GW Chapman Consulting in Syracuse and columnist for In Good Health, provides medical practice consulting services to medical groups. He cited multiple reasons for the uptick in hospital closures, but the pandemic ramped up the rate. “I think the first hit hospitals took was staffing,” Chapman said. “I think it resulted in a quarter of a million nurses
who quit or retired.” Many people assumed hospitals made money from the number of sick people during the pandemic. However, Chapman said that because hospitals’ reimbursement did not meet their expenses, the pandemic hurt hospitals financially. The broken supply chain, along with increased need for personal protective equipment (PPE), caused expenses to skyrocket. Plus, as staff quit, hospitals had to bring in costly temporary traveling nurses and raise wages. Some travelers made as much as 50% more than local staffers. Although travel nursing is not as popular as during and directly after the pandemic, the effect still sapped hospital budgets. Low reimbursement from insurance companies and Medicare has also made it tough for hospitals. Chapman
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said that their payrates for physician services have remained relatively flat for 20 years. “It’s tough to increase income without increasing volume,” he said. Ethically, physicians can’t make unnecessary referrals to others in the hospital system. Chapman said that primary care providers make referrals for some issues because they’re swamped. Medicare auditors would catch frivolous referrals anyway. Chapman views Medicare for all as the solution for hospitals receiving sufficient reimbursement. “This is ridiculous with all the different insurances,” he said. “It’s tough to determine what benefits are and most consumers don’t understand what their benefits are. People with insurance still have high deductibles and copays. Medical debt is still the number one cause of bankruptcy.”
