A new federal program can help rural hospitals stay open but only if the hospitals agree to limit services to emergency and out-patient care. Kansas has 104 rural hospitals, and about 80% of them are losing money while some are in danger of closing. The fact that Kansas has not agreed to Medicaid expansion only makes the problem worse. The classic problem for rural hospitals in every state is that they lose money because they don’t have enough patients, and payments from private insurance do not cover the full costs of the services. Most rural hospitals have a high percentage of Medicare and Medicaid patients, and these programs, like private insurance, do not cover all costs either.
The new program creates opportunities for federal subsidies and a 5% increase in Medicare payments in return for hospitals becoming federally designated as “rural emergency hospitals.” A low volume of patients, combined with a high percentage of Medicare and Medicaid patients and payments from private insurance companies that, like those from government programs, don’t cover the cost of providing services.