Michigan's Rural Healthcare Providers Face Crisis, Reports Michigan Health & Hospital Association

LANSING, Mich. -- As leaders from Michigan's small and rural hospitals meet this week for a conference sponsored by the MHA Healthy Michigan Foundation, Michigan Health & Hospital Association president Spencer Johnson stated, "Communities need to realize the value of their local hospitals before these facilities are forced to close their doors." Nearly 100 small and rural Michigan hospitals provide necessary, often lifesaving, care to thousands of the state's citizens. This network of nonprofit community hospitals is vital to everyone's wellbeing. But the challenges health care providers confront have reached crisis proportions, Johnson said.

Rural communities tend to be more economically depressed, have a more elderly population, experience more unemployment, and have lower incomes than their urban counter-parts. Hospitals serve as the "safety net" caregiver in these communities, treating every patient who needs them, regardless of their ability to pay. As the following fact sheet shows, rural hospitals are an integral part of their communities, providing access to health care and serving as a hub for public health, wellness and social services. They also contribute to communities by providing jobs, recruiting health practitioners, consuming services of local businesses, and helping make communities more attractive places to live and work in.

Despite the vital role hospitals play, the challenges they confront continue to mount. Chronic government underfunding for Medicare and Medicaid, an increasing number of uninsured and underinsured residents, exponential increases in the cost of technology and pharmaceuticals, and an aging and increasingly costly workforce are all seriously impacting the ability of hospitals to continue providing community-based services.

"The time is overdue for healthcare to become a priority in Michigan," Johnson said. "It will take a partnership of government, insurers, employers, policy-makers and caregivers to develop solutions to assure continued access to local care services. This enormous responsibility deserves our collective best."

The Michigan Health & Hospital Association, based in Lansing, is a state association representing and supporting hospitals, health systems and other healthcare providers through communication, advocacy and education.

* More than three-fifths of Michigan's acute-care hospitals (91 of 144) are classified as "small or rural." Hospitals with fewer than 150 staffed beds are considered small. Rural hospitals are those located in counties that are not part of a metropolitan statistical area, as defined by the US Census Bureau.

* During 2001, 58 percent of Michigan's small and rural hospitals experienced a negative patient margin and 34 percent experienced a negative operating margin. During the same period, these hospitals had an aggregate patient margin of negative 1.6 percent and a positive operating margin of just 1.7 percent. (AHA Annual Survey of Hospitals, 2001) Note: Patient margin is all money derived from direct patient care. Operating margin includes money from patient care, gift shop sales, cafeteria and other hospital business ventures.

* Michigan's rural hospitals provided more than $143 million in uncompensated care for the uninsured and underinsured during 2001. Statewide that year, hospitals provided $885 million in uncompensated care. (AHA Annual Survey of Hospitals, 2001)

* The state Medicaid program reimburses hospitals only 73 cents for every dollar spent providing patient care to Medicaid beneficiaries (Medicaid Cost Reports). Approximately 12 percent of all inpatient discharges at Michigan's small and rural hospitals are covered by the Medicaid program. In addition, expenses for approximately 31 percent of all babies delivered in rural areas are paid by Medicaid. (Michigan Inpatient Data Base for July 2001 - June 2002)

* Statewide, the number of residents aged 65+ increased by 100,000 from 1.1 million to 1.2 million from 1990 to 2000. That age group, generally insured by Medicare, comprises about 15 percent of the population of Michigan's rural counties. (US Census Bureau)

* Forty-eight rural Michigan hospitals lost money providing services to Medicare beneficiaries in 1999-2000. For that same time period, the overall Medicare margin for small and rural hospitals was 0.4 percent. However, the Medicare reimbursement for outpatients at these facilities was 15 percent less than cost, resulting in a 15 percent negative margin on outpatient services. (Medicare Cost Report Database)

Source: Michigan Health & Hospital Association

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