1 in 4 Rural Michigan Hospitals Is in Danger of Closing, Even During a Pandemic. Here’s Why.

Overburdened and underfunded, Michigan’s rural hospitals are in need of life support to continue serving a large swath of the state’s families.

PERRY, Mich.—A fall while cleaning the gutters or a regularly scheduled mammogram; lab work or an emergency you didn’t see coming—There are many reasons Michiganders may need to head to one of the state’s 185 hospitals, at any times

But in Michigan’s rural areas, journeying to the nearest hospital is an increasingly more difficult experience, and one that’s getting worse because of the pandemic.

In Perry, Mich., where Dr. Jan Liu is a family physician in private practice, this is a critical issue he worries about.

Located between Flint and Lansing along I-69, Perry is a town of about 2,000 rural Michiganders who, data shows, face economic hardships. Most of his patients rely on Medicaid, or have no insurance at all.

Liu, who works with the Committee to Protect Health Care (formerly the Committee to Protect Medicare), says the families he serves already have struggles with reliable transportation, which means they rely heavily on the hospital Liu works with.

“For people who can’t afford to take time off or don’t have transportation, going to Ann Arbor or Flint or Lansing just isn’t an option,” Liu told The ‘Gander. “Fortunately, the hospital I work for has been providing care to the residents of this area for 100 years now. Without hospitals like these, my patients would have to travel very long distances to get access to basic services.”

But Liu pointed out that even the hospitals that remain open, like the one he works with, have struggles.

“As with many rural areas, we have a shortage of specialists,” he said. “We have a serious shortage of mental health providers and many of my patients struggle with depression, anxiety, [and] bipolar disorder.”

He said that while telemedicine does help people access specialist health services, there’s an overlap with another rural challenge—lack of access to broadband internet—that makes telehealth not a viable option for over 850,000 Michiganders.

The Data That Has Healthcare Workers Concerned

That problem is especially real in the Upper Peninsula, Progress Michigan’s Rural Communications Director Levi Teitel told The ‘Gander. Progress Michigan is a non-profit organization that collects data on various political issues facing the state.

“Broadly speaking, the biggest issue rural communities face with health care is the lack of specialization, which affects outcomes in obstetrics, mental health, and other areas,” he said. “There are zero child psychiatrists in the entire Upper Peninsula.”

Closures, too, are remarkably high nationwide. Since 2013, more than 110 rural hospitals have closed in the US. In Michigan we face a similar battle as COVID-19 has hospitals overburdened and underfunded when it comes to being equipped to handle a pandemic.

“Rural Michigan hospitals are falling behind, with 1 in 4 rural hospitals at risk of closing––the ninth-highest rate in the nation,” he said. “For comparison, about 1 in 4 Michigan residents live in a rural community. In Michigan, the top five counties with the worst social determinants of health outcomes were all rural.”

But there’s a bigger picture to why Michigan’s rural hospitals are in such dire straits.

How the Pandemic Fueled a Fire in Rural Healthcare

Across Michigan and the nation, we’ve seen the coronavirus overtax the healthcare system and the frontline workers who have cared for patients and their families.

In fact, rural hospitals lost between $53 billion and $122 billion to the pandemic, according to a study commissioned by the American Hospital Association.

Dickinson County Healthcare System in Iron Mountain has faced struggles for years.

Between 2016 and 2018, total inpatient days fell by 15%, and Dickinson had two attempts to sell to neighboring health systems fall through.

Slashing jobs and replacing its CEO made the first quarter of 2019 profitable, but within a year the public health emergency that is the spread of COVID-19 would test all Michigan’s rural health systems.

Cuts are a common approach. With almost half of all rural hospitals nationwide losing money, eliminating workforce is a common strategy to keep the doors open. That leaves services like obstetrics or mental health hard to find in rural communities, though.

Why Michigan’s Seniors Are Now Most at Risk

In much of rural America, populations have been shrinking for decades. More than 80% of Americans now live in urban areas, up from just over half a century earlier as measured by Census data. The American Enterprise Institute explained that this migration to cities has coincided with rural economies stagnating as businesses that kept many communities afloat have disappeared over the years. And recovery from the 2008 economic disaster has largely skipped over rural America according to the Center for American Progress.

When urban hospitals close, there are typically other health options available to their patients. For instance, Kalamazoo is served by both Bronson and Borgess hospital systems, and metro Detroit by several including Beaumont, Henry Ford and Detroit Medical Center. That’s untrue for a rural hospital, where the next nearest hospital could be a deadly 45 miles away.

This means that many rural communities look a lot like Perry, where Dr. Lui works, experiencing a lack of both physical and economic mobility. This leaves particularly the aging population with few options and challenges affording care.

As Dr. Liu explained, that leads to a higher percentage of rural patients that rely on Medicare and Medicaid for their health insurance. This leaves rural hospitals particularly susceptible to the politics in Washington while more urban hospitals have more comfort in adapting to cuts to public health insurance.

As politics in Washington impact Medicare funding, that can disrupt the reimbursements these rural hospitals rely on. Medicare funding is a common target of Republican efforts to rein in the federal budget, which makes the waters regularly choppy and unpredictable for rural hospitals.

But there’s a plan to protect rural hospitals from this tumultuous political reality.

The Plan to Keep the Lights On at Local Hospitals

Republicans and Democrats in Congress are coming together to address the challenges of rural hospitals.

Their plan, The Save Rural Hospitals Act of 2021, aims to answer the problems plaguing rural hospitals.

Something holding rural hospitals back is a calculation called the “Medicare Area Wage Index,” which is used to calculate reimbursements for hospitals. The index is designed to meet labor costs that vary greatly from one rural hospital to another, and that leaves some hospitals decidedly in the lurch.

Calculating how Medicare will reimburse a hospital is an arcane process, but in broad strokes the index is how Medicare determines what a hospital’s labor costs are, and it acts as a major determining factor in how much hospitals get paid. The issue arises in how heavily that factor is weighed. Hospitals with a low index score based on lower labor costs can wind up with so little compensation that they can’t cover other expenses like equipment and supply.

Also, the labor market is prone to rapid, unexpected changes that could upend the calculation making it harder to predict exactly how much reimbursement a hospital would get.

The Save Rural Hospitals Act would solve that by setting a sort of “minimum wage” for Medicare reimbursements, ensuring that hospitals will get a certain amount of money regardless of what the wage index calculation would be. This is designed to lift up the hospitals suffering most quickly, if the act becomes law.

That would mean more communities could be protected against losing their hospitals and be forced to travel great distances in emergencies. Longer term, it could also allow rural hospitals to employ more specialists to provide care to Medicare and Medicaid patients on issues they currently aren’t equipped to handle.

It also gives rural hospitals immunity to a political process called “sequestration,” an automatic cut in funding to programs, used to force compromises when creating a budget.

The Save Rural Hospitals Act would mean that when this happens, one of the things that won’t be cut is Medicare’s payments to rural hospitals.

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Both these ways of strengthening Medicare will help rural hospitals deal with the challenges their community faces, and would use the levers of politics to actually diminish the dangers political dysfunction poses to rural health.

“Medicare payment policies can at times have unintended consequences in rural health,” said Nathan Baugh, Director of Government Affairs for the National Association of Rural Health Clinics. “The Save Rural Hospitals Act will correct one of the flawed formulas contributing to the financial struggles of rural providers.”

For that to happen, though, the act needs to pass. So far it has been a serious challenge to raise awareness about the need for it, GovTrack shows.

It’s still in the early stages of development in Congress and would likely need support from influential members of Michigan’s congressional delegation. You can advocate for that support by finding your representative in Congress and reaching out to them to express your support for the legislation.

Katelyn Kivel is a politics, policy and law journalist from Kalamazoo, Michigan. She studied political science at Western Michigan University and has been published in multiple national and international outlets.