Nebraska signed a multibillion-dollar contract with a managed care giant this year despite the company paying nearly $1 billion nationally to settle concerns about pharmacy overbilling practices.
Those payments include a $29.3 million settlement with the State of Nebraska. Then-Attorney General Doug Peterson and officials with Centene Corp. signed the settlement agreement on Dec. 29, 2021.
Nine months later, the state Medicaid director announced that Nebraska Total Care, a Centene subsidiary, would be one of three firms awarded a Medicaid managed care contract. Each contract is worth up to $4.25 billion for 2024 through 2029, with three optional extension years worth up to $850 million each.
The three contractors will be responsible for managing physical and behavioral health care, pharmacy services and dental benefits for almost all Medicaid patients. Together, they will oversee the care of some 347,000 low-income Nebraskans.
It’s unclear what state Medicaid officials knew about Centene’s Nebraska settlement when they awarded the contracts.
The Attorney General’s Office did not make the settlement public until Oct. 26 last year, one month after the contract awards were announced and 10 months after the agreement was signed. Even then, the office simply posted a link to the settlement document, without a press release or other announcement.
Still, the settlement went public before the Department of Health and Human Services actually signed the contract with Nebraska Total Care on Jan. 24.
HHS and the Attorney General’s Office both refused to answer any questions about the Centene settlement or the contract awards, citing pending litigation.
The litigation in question was filed by Community Care Plan of Nebraska, doing business as Healthy Blue. The company filed the suit in December of last year after being shut out for the new contracts and losing two rounds of administrative protests.
Healthy Blue currently has a Medicaid managed care contract with the state that ends Dec. 31. The other current contractors are Nebraska Total Care and United HealthCare of the Midlands, both of which won new contracts.
In its suit, Healthy Blue contends, among other things, that Centene’s bid should have been disqualified because the company did not disclose the Nebraska settlement or other state investigations into prescription benefit overcharging.
At least 18 states have settled with the St. Louis-based managed care company over its pharmacy benefits practices in the last two years. The first was Ohio, where State Attorney General Dave Yost filed suit against the company following state investigations.
According to the Ohio Dispatch, Yost alleged that Centene had sought payment for services that had already been reimbursed, failed to disclose the true costs of pharmacy services, including discounts, and artificially inflated dispensing fees. The company ended up agreeing to pay $88.3 million to settle the case in June 2021.
At the same time, Centene agreed to pay $55 million to Mississippi, which was investigating similar allegations, and set aside $1.1 billion for settlements with other states.
Settlement agreements so far have included $215 million for California, $165.6 million for Texas, $26.7 million for Kansas and $44 million for Iowa, where a state investigation and audit found irregularities in the company’s reporting of costs of pharmacy benefits to Medicaid.
Nebraska officials refused to say what investigations had been done leading up to the settlement here. But the agreement made reference to the state “reviewing†the operations of Total Care and its pharmacy benefits manager, Envolve.
The agreement also said that “the State requires full transparency from the Centene Entities around the costs and fees associated with those services paid for by the States†and that Centene’s payment was intended to satisfy any repayment obligations to the state.
As with the other settlements, Centene denied any wrongdoing or liability and the agreement said the “State believes the Centene Entities have provided high quality pharmacy benefit services to the State and are qualified to continue to provide such services.â€
Nebraska isn’t the only state to reach a settlement and then turn around and award Centene a new Medicaid managed care contract.
Ohio officials awarded the company a new contract shortly after that state’s settlement was reached. The officials said that including Buckeye Health Plan, a Centene subsidiary, would give residents “more options when choosing a managed-care health plan in the department’s new person-centered vision of care.â€
California also signed Centene to new contracts for Los Angeles and Sacramento Counties.
In a response to the protests filed by Healthy Blue, Centene said it had disclosed everything required under the state’s request for proposals. The RFP called for bidders to provide information about “any criminal or civil investigation by a state or federal agency.â€
Centene argued that all but three of the state agreements, which were disclosed, were “no-fault settlements†reached after “proactive outreach†by the company, rather than investigations that needed to be disclosed.
In her decision denying Healthy Blue’s protest, HHS CEO Danette Smith sided with Centene. She said the agency had exercised discretion in considering the company’s disclosures and had taken into account their “timing, no-fault character and anticipatory nature.â€
The Healthy Blue lawsuit is the latest trouble to hit Nebraska’s procurement process.
The process has come under scrutiny after a series of cases in which officials wound up choosing a low-cost bidder that failed to do the job. The most recent case was the selection of St. Francis Ministries, a Kansas-based nonprofit, to manage Omaha-area child welfare cases. Nebraska ended up terminating the contract early.
Speaker of the Legislature John Arch of La Vista proposed several changes to the procurement process this year, following an in-depth study and report in 2022. His bill was not debated this year because of an ongoing filibuster over other issues but could be considered next year.
Nebraska’s current Medicaid managed care contracts date to 2017, when the state signed with three private companies to administer what was then $1.2 billion worth of Medicaid services. Since then, two of the original three companies merged, which led to the state signing a contract with Healthy Blue.
181 rural hospitals have closed since 2005—see the states that have been impacted
181 rural hospitals have closed since 2005—see the states that have been impacted
Rural hospitals have long struggled financially and the situation is getting worse. In the mid-1940s, Congress provided funding to in rural areas, leading to a rise in their numbers, especially in the South. By the 1980s and 1990s, those hospitals began closing, partly a result of Medicare spending.
Since 2005, 181 rural hospitals have shut their doors. The causes are many: an older, poorer population; advances in outpatient medical procedures; and more recently, a decision among many Southern states against expanding Medicaid under the Patient Protection and Affordable Care Act, or the ACA. That leaves hospitals with a greater share of uncompensated care as uninsured patients continue to be treated. The coronavirus pandemic made matters worse by delaying nonessential services that bring in revenue. The fallout from hospital closings . Trauma centers have shut down, as have obstetric units, putting residents’ health at risk.
cited data from the University of North Carolina to identify how states have been affected by the growing number of rural hospital closures. Data includes closures from 2005 to the present.
A small or isolated rural area is designated by the United States Department of Agriculture’s (RUCA) codes. A small area means most people who commute stay within a town of under 10,000 people. An isolated area means the flow of people remains outside of metropolitan areas and small towns.
About live in rural communities, leaving a portion of Americans without easy access to emergency health care. The Biden administration's recent announcement to invest in rural areas disproportionately affected by the coronavirus pandemic may begin to ease access to health care in rural communities. Further action from policymakers in Congress is the only other direct way to solve for these health care deserts.
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#36. Maryland
- Total rural hospitals closed since 2005: 1 (one in small or isolated rural communities)
- Total beds lost: 3
in Crisfield, Maryland, a community of 2,500 on the Eastern Shore of the Chesapeake Bay, was absorbed into the much larger Peninsula Regional Health Systems in 2019. McCready pursued the affiliation after years of declining use. A free-standing clinic was built in place of the smaller hospital, offering round-the-clock emergency care, physical and speech therapy, imaging and laboratory services, behavioral health services, and family health care. Offering emergency care is important. A 2016 report found that hospital closures reduced access to such care.
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#35. Alaska
- Total rural hospitals closed since 2005: 1 (none in small or isolated rural communities)
- Total beds lost: 12
Sitka Community Hospital in 2019 was integrated into , also in Sitka, which is on Baranof Island in Southeast Alaska and accessible by plane or boat. The Southeast Alaska Regional Health Consortium now operates a family clinic and other services at the former community hospital, while emergency care is provided at Mount Edgecumbe Medical Center, 2 miles away. Nearly every state had a hospital before the coronavirus pandemic, which only exacerbated the trend. In 2016, a noted that Mount Edgecumbe Hospital was built in the 1940s; the city opened Sitka Community Hospital in 1956; and between the two, the community had two emergency rooms, obstetrics centers, and physical therapy facilities.
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#34. Wisconsin
- Total rural hospitals closed since 2005: 1 (none in small or isolated rural communities)
- Total beds lost: 25
Franciscan Skemp Medical Center in Arcadia, Wisconsin, a city of nearly 3,000 northwest of Milwaukee, closed in 2011, leaving the community without a hospital for the first time in 75 years, the . The hospital said it was operating at a loss with too few patients, but would keep a nursing home open. The Mayo Clinic Health System—Franciscan Healthcare offers primary and specialty care in Arcadia.
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#33. North Dakota
- Total rural hospitals closed since 2005: 1 (one in small or isolated rural communities)
- Total beds lost: 25
in Richardton, North Dakota, a community of 529 people, became a skilled nursing facility in 2009 with the help of a $950,000 federal grant. Its closure meant that under federal rules, St. Joseph’s Hospital in Dickson, North Dakota, about 25 miles away, became eligible for a critical access designation, which allows . Critical access hospitals must be at least 35 miles from each other and Richardton Memorial already held that status. St. Joseph’s Hospital recorded $13.2 million in operational losses in 2002 until June 2007, according to The Dickinson Press.
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#32. Washington
- Total rural hospitals closed since 2005: 1 (none in small or isolated rural communities)
- Total beds lost: 25
Deer Park Hospital in Deer Park, Washington, closed in 2008, after failing to attract enough patients. According to the hospital admitted on average fewer than one patient a day, with many residents traveling instead to hospitals 18 miles away in Spokane, Washington. Losing patients to nearby larger medical centers has been a problem for smaller rural hospitals, according to the one that can exacerbate a perception that they are delivering poor care.
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#31. New Jersey
- Total rural hospitals closed since 2005: 1 (none in small or isolated rural communities)
- Total beds lost: 83
William B. Kessler Memorial Hospital in Hammonton, New Jersey, shut its doors in 2009 after years of financial struggles, including filing for Chapter 11 bankruptcy in 2006. AtlantiCare Health System opened a satellite emergency care department and medical imaging department there, and was planning an ambulatory care center nearby, according to . Later, a health care investment group bought the hospital to offer , but through a variety of providers.
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#30. Massachusetts
- Total rural hospitals closed since 2005: 1 (none in small or isolated rural communities)
- Total beds lost: 98
North Adams Regional Hospital , angering residents and spurring calls for an investigation. Berkshire Health Systems bought the property and then was forced by a court order to reopen the emergency room. It went on to expand the health care services it offers.
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#29. Nevada
- Total rural hospitals closed since 2005: 2 (one in small or isolated rural communities)
- Total beds lost: 25
Residents in Tonopah, Nevada, were left without a hospital within 100 miles when the Nye Regional Medical Center closed in 2015, two years after sent it into bankruptcy. The hospital was gradually replaced by a clinic; a community paramedic program; and services in physical therapy, family medicine, and mental health. But in the meantime, some people for conditions that only worsened. In the Duck Valley Reservation, 100 miles north of Elko, Nevada, a conversion produced the , a rural outpatient clinic that serves the Shoshone-Paiute Tribes.
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#28. Ohio
- Total rural hospitals closed since 2005: 2 (one in small or isolated rural communities)
- Total beds lost: 33
in northeast Massillon, Ohio, closed in 2018 after struggling with losses for six years. A nearby hospital was only 20 minutes away. There were 43 hospitals operating at a deficit in the state in 2015 and another 17 had operating margins of less than 2%, according to Columbus Business First. As has occurred in other states, Ohio hospitals have been converted into outpatient centers, free-standing emergency rooms, and in a new trend, of 15 beds.
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#27. Nebraska
- Total rural hospitals closed since 2005: 2 (two in small or isolated rural communities)
- Total beds lost: 36
in Oakland, Nebraska, became in 2021 the latest hospital to close in the state, even in the midst of the pandemic. Officials pointed to low numbers of in-patient and emergency room patients. Its two clinics in Oakland will remain open and MercyOne said it might build a in the area. Tilden Community Hospital in Tilden, Nebraska, became an in 2014 after running at deficits of up to $60,000 a month.
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#26. Virginia
- Total rural hospitals closed since 2005: 2 (none in small or isolated rural communities)
- Total beds lost: 45
Virginia’s two Democratic senators were among a bipartisan group that introduced the , which would take on a funding formula that leads to disproportionately low Medicare payments for rural hospitals in areas with low wages. It also would provide money for rural hospitals operating on very thin margins. Rural hospitals have continued to shut down at record rates even during the pandemic, with more than 20 closing in 2020.
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#25. Michigan
- Total rural hospitals closed since 2005: 2 (one in small or isolated rural communities)
- Total beds lost: 48
²Ñ¾±³¦³ó¾±²µ²¹²Ô’s warned in 2020 that the coronavirus could force even more closures amid pandemic-related disruptions. Patients were delaying elective surgeries and procedures such as mammograms, all of which bring in revenue for the hospitals. In August 2021, the governor announced from the federal Health Resources and Services Administration for 51 small, rural hospitals. The money was to be used for COVID-19 testing and treatment.
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#24. Indiana
- Total rural hospitals closed since 2005: 2 (none in small or isolated rural communities)
- Total beds lost: 70
Most of the state’s rural hospitals have been designated critical access hospitals, originally meant to provide for higher Medicare payments, but which include limitations on size. Although some rules have been eased during the pandemic, many of the hospitals have only 25 in-patient beds and a couple of intensive care unit beds, according to Indiana Public Radio station . There are 16 counties in the state that lack a hospital at all. Like hospitals elsewhere, Indiana’s are taking in less income as people delay procedures that would be paid for by private insurance.
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#23. Illinois
- Total rural hospitals closed since 2005: 2 (none in small or isolated rural communities)
- Total beds lost: 119
The coronavirus on rural hospitals, as many lacked enough staff or hospital beds to treat those who were ill, according to a group from Southern Illinois University and the University of Illinois examining rural health. Many of those hospitals don’t have an intensive care department, but as the larger urban hospitals filled, the rural hospitals were patients as they normally would. In April, U.S. Sen. Dick Durbin reintroduced the bipartisan to help rural hospitals in danger of closing. It would allow more to qualify as critical access hospitals, becoming eligible for Medicare funds, by easing the rule requiring 35 miles between the hospitals.
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#22. Louisiana
- Total rural hospitals closed since 2005: 2 (none in small or isolated rural communities)
- Total beds lost: 127
Louisiana’s rural hospitals were helped by the state’s expansion of eligibility for Medicaid in 2016, according to theÌý. By 2018, more than 487,000 had signed up for Medicaid. The coronavirus sparked another surge of 208,000 people from November 2019 to November 2020. Hospitals in states where Medicaid eligibility was expanded saw their , according to a paper from The Commonwealth Fund.
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#21. South Dakota
- Total rural hospitals closed since 2005: 3 (three in small or isolated rural communities)
- Total beds lost: 44
The South Dakota Office of Rural Health ranks the state’s 66 counties for residents’ health, their access to health care, and other factors. Ten rural counties, some of which are home to Native American reservations, are consistently in the bottom quartile in all categories, according to the . As of November 2021, South Dakota has not expanded . Meanwhile the pandemic was cutting into hospitals’ revenues as patients stayed away and delayed noncritical procedures.
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#20. Maine
- Total rural hospitals closed since 2005: 3 (one in small or isolated rural communities)
- Total beds lost: 126
Rural hospitals lost $20 million over five years, according to a briefing by the in 2019. Of the eight hospitals that have five years of consecutive losses, seven are in rural areas, but the hospitals also forgive $45 million on patients’ bills each year. Meanwhile Maine’s rural residents are older and facing more unemployment and more chronic diseases.
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#19. Arkansas
- Total rural hospitals closed since 2005: 3 (one in small or isolated rural communities)
- Total beds lost: 143
have done better than those in neighboring states because it expanded Medicaid eligibility as permitted under the Patient Protection and Affordable Care Act, according to the Arkansas Center for Health Improvement and the Arkansas Foundation for Medical Care. Even so, in 2019 the ​​De Queen Medical Center in De Queen, Arkansas, became the after the expansion because of financial problems. A new hospital is under construction.
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#18. Kentucky
- Total rural hospitals closed since 2005: 4 (three in small or isolated rural communities)
- Total beds lost: 114
A 2020 report from the Kentucky Hospital Association found that up to were at risk of closing. The state’s 68 rural hospitals are heavily reliant on government payments, with Kentucky having the sixth-highest percentage of patients covered by Medicaid or Medicare. The report estimated that even with federal relief funds, the hospitals will rack up losses of about $1.3 million due to the pandemic. The association urged lawmakers not to cut reimbursement rates.
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#17. Arizona
- Total rural hospitals closed since 2005: 4 (none in small or isolated rural communities)
- Total beds lost: 135
are in danger of closing because of financial reasons, noted a 2019 report from Protect Our Care, a health care advocacy group. Among the three that closed after 2010, only one shut its doors after the state expanded Medicaid as allowed under the Affordable Care Act. And under the ACA, between 2013 and 2015, Arizona hospitals’ uncompensated costs dropped by $458 million or 58%.
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#16. South Carolina
- Total rural hospitals closed since 2005: 4 (two in small or isolated rural communities)
- Total beds lost: 208
Former Gov. Nikki Haley created a to help the merger of large and smaller hospitals, both designated as critical access hospitals. The larger hospital was required to make a 10-year commitment to the rural community. Despite the effort, three rural hospitals closed under Haley’s administration. The Center for Budget and Policy Priorities notes that all four of the in the state were in counties with a higher percentage of Black residents than the state average.
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#15. New York
- Total rural hospitals closed since 2005: 5 (two in small or isolated rural communities)
- Total beds lost: 145
Ìýin New York’s Chautauqua County near Lake Erie shut down at the end of 2019, when it was grappling with a $7 million deficit. The Seneca Nation said the hospital’s closing would make it more difficult for residents of its Cattaraugus Territory to get health care. Patients at all hospitals that tended to be racial and ethnic minorities who were uninsured and perhaps undocumented, according to Elisabeth Benjamin, a health policy expert at the Community Service Society.
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#14. West Virginia
- Total rural hospitals closed since 2005: 5 (one in small or isolated rural communities)
- Total beds lost: 196
, the only hospital in Mingo County, West Virginia, closed in May 2020 after going into Chapter 11 bankruptcy and just as the coronavirus hit. Its revenue was cut by half as nonessential procedures came to a stop, emergency room visits dropped, and its hope of being acquired by another hospital was upended. The pandemic has worsened the financial situation of rural hospitals across the country.
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#13. Pennsylvania
- Total rural hospitals closed since 2005: 5 (one in small or isolated rural communities)
- Total beds lost: 225
Pennsylvania has started an —with hospitals receiving what are called instead of fee for services—to try to help rural hospitals with their financial problems. Hospitals are given a fixed amount for a certain number of services. The Pennsylvania Rural Health Model was developed with the federal Centers of Medicare and Medicaid Services, and now has 18 rural hospitals and six payers participating.
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#12. Minnesota
- Total rural hospitals closed since 2005: 6 (four in small or isolated rural communities)
- Total beds lost: 230
A study from the in May 2021 found that the closing of rural hospitals strained municipal providers of emergency medical services, in particular, as they tried to get patients to other hospitals. The average length of ambulance trips for municipal Emergency Medical Service agencies rose 22%. For private EMS agencies, the length rose 10%. Private companies are free to leave once their contracts expire.
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#11. Mississippi
- Total rural hospitals closed since 2005: 6 (three in small or isolated rural communities)
- Total beds lost: 290
Mississippi is among the Southern states that have declined to expand Medicaid under the ACA, a decision linked to higher uncompensated costs. According to the , Medicaid expansion improved hospital operating margins and financial performance, and reduced the likelihood that a hospital would close, especially in rural areas. The is searching for ways to expand Medicaid despite opposition from the governor. Almost half of all rural hospitals are at risk of closing, and in 2019, the state’s hospitals had more than $600 million in uncompensated care.
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#10. Alabama
- Total rural hospitals closed since 2005: 7 (five in small or isolated rural communities)
- Total beds lost: 180
Like Mississippi, Alabama is among the swath of Southern states that has . Before the pandemic, 30 rural hospitals were at risk of closing and the financial condition of many have since gotten worse. Hospitals in the state need about to make up for lost revenue, according to the president of the Alabama Hospital Association.
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#9. Florida
- Total rural hospitals closed since 2005: 8 (three in small or isolated rural communities)
- Total beds lost: 294
In 2020 as COVID-19 took off, closed in Florida agricultural areas that are also home to state penitentiaries. Federal officials set aside $10 billion from in April 2020 for rural health clinics and hospitals, enabling them to . The Department of Health and Human Services noted that most operate on very thin margins. in the summer of 2021 as COVID-19 cases soared, but since then hospitalizations have dropped. In all, about 60,800 people have died as of November 2021.
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#8. Missouri
- Total rural hospitals closed since 2005: 8 (three in small or isolated rural communities)
- Total beds lost: 351
More than 42% of , or 26 of them, are vulnerable, according to a review by the , a health research and consulting company. Only three states top Missouri in hospitals in danger of closing. Missouri has just approved and began processing applications in October 2021. A lack of Medicaid expansion is a key risk to the health of rural hospitals.
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#7. Kansas
- Total rural hospitals closed since 2005: 9 (four in small or isolated rural communities)
- Total beds lost: 268
Of the 105 rural hospitals in Kansas, and are vulnerable to closure, according to a study from the Center for Health Care Quality and Payment Reform. Kansas, which has not adopted , ranks #40 in the country in terms of public health spending. The state is exploring a new model: rural emergency hospitals, a new designation under federal legislation approved late in 2020. One key difference between emergency hospitals and current ones are overnight stays, reflecting the trend toward more outpatient procedures. Another would be an annual federal payment to cover core facility costs.
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#6. Georgia
- Total rural hospitals closed since 2005: 9 (two in small or isolated rural communities)
- Total beds lost: 279
closed in Georgia in 2020, a result of financial problems deepened by the coronavirus and a decline in the number of patients even with a rise in COVID-19 cases. For many hospitals in the state, do not provide the income they need to operate, and Georgia has Medicaid eligibility. When hospitals close, the communities suffer in other ways too, with companies reluctant to move to areas without health care and local businesses also shutting their doors.
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#5. Oklahoma
- Total rural hospitals closed since 2005: 9 (four in small or isolated rural communities)
- Total beds lost: 318
that shut down or landed in bankruptcy were part of EmpowerHMS, 18 hospitals in eight states owned or co-owned by Jorge Perez, with nine others in what prosecutors said was a $1.4 billion scheme of billing for . Perez had claimed that he was trying to save rural hospitals that were struggling financially.
Monkey Business Images // Shutterstock
#4. California
- Total rural hospitals closed since 2005: 9 (three in small or isolated rural communities)
- Total beds lost: 336
A of the closure of 92 rural hospitals in California from 1995 to 2011 found that mortality rates rose nearly 6%. The closings of urban hospitals did not have a similar fall-out, the University of Washington researchers found. In rural areas, ambulances have to travel further to patients after a hospital closes. Plus there are fewer ambulances, meaning residents might be left waiting after a car accident, heart attack, or other emergency, Dr. Nancy Dickey, president of the Rural and Community Health Institute at Texas A&M, told .
ARIANA DREHSLER // Getty Images
#3. North Carolina
- Total rural hospitals closed since 2005: 11 (four in small or isolated rural communities)
- Total beds lost: 361
Among the state’s rural hospitals, Ìý(15 out of 50) are vulnerable to closing because of financial deficits, according to a study from the Chartis Group in 2020. Six of the hospitals were considered most vulnerable; nine were at risk. North Carolina is among the states, all Republican led, that have not expanded Medicaid coverage under the ACA. The study found that a rural community hospital in a state that has expanded Medicaid has a 62% lower chance of closing.
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#2. Tennessee
- Total rural hospitals closed since 2005: 16 (nine in small or isolated rural communities)
- Total beds lost: 630
Tennessee faced the Ìýwith more than a quarter of its rural counties lacking a hospital and a fifth with no emergency room services. It has had the highest number of closures , and ​​75% of the 25 essential access rural hospitals that remain are at high risk of closure, according to the . The state’s decision not to expand Medicaid means its rural hospitals have high levels of for the low-income and uninsured residents who live in the countryside and who are disproportionately chronically ill.
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The Washington Post // Getty Images
#1. Texas
- Total rural hospitals closed since 2005: 24 (16 in small or isolated rural communities)
- Total beds lost: 880
Texas leads the country in the number of rural hospital closings, and like other Southern states, it has its Medicaid coverage under the ACA. In early 2021, the Biden administration that allowed Texas to be reimbursed for uncompensated care for patients without health insurance and to be paid for health care reaching low-income residents. The move has so far not pushed Texas toward Medicaid expansion, although the Texas Legislature has increased funding for higher . The number of rural hospitals has fallen from about 300 in the 1960s to 158 today, with more than 20 communities affected by the hospital closures.
This story originally appeared on and was produced and distributed in partnership with Stacker Studio.
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