More than a quarter of Louisiana’s rural hospitals at risk of closure, new report says

More than one in four of Louisiana’s rural hospitals are in precarious financial position and face the possibility of closure, according to a new report from a national health care consulting firm.

Between 26% and 30% of Louisiana’s rural hospitals fall into the “vulnerable to closure” category, according to the report from Chartis. The consultants said the threat of closure illustrates a critical weakening of the health care in non-urban areas where the need is often the most acute and many already face high hurdles to get care.

“America’s rural safety net has been in crisis for 15 years,” the report concludes. “The mission of the safety net to serve under-resourced communities is unraveling.”

The problems afflicting Louisiana’s rural health care providers are also being felt in other states. In Florida, Nebraska, Tennessee and North Carolina, 40% or more of their rural hospitals are vulnerable to closing, the report says. Nationwide, more than 400 rural hospitals are in danger of closing, about 20% of the nationwide total, the report notes.

Almost half of rural hospitals nationwide are operating at a deficit, the report adds, a key indicator of peril. That makes it harder to serve the rural residents for whom they exist.

“The mission of these rural hospitals is to serve the underserved; no margin, no mission,” said Michael Topchik, one of the authors of the report. The problems appear to be accelerating.

“When we started looking at all those metrics we had been tracking for 15 years, we were like ‘holy cow,’” Topchik said. “Fifteen years ago, one-third were operating in the red. Now 50% are operating in the red.”

Other factors were also considered in determining whether a hospital was at risk, including patient mix and average daily census, Topchik said.

Last time Chartis performed the study, in 2020, they identified 453 hospitals vulnerable to closure, he said. Since then, 30 of those have closed.

“Things are dire and getting worse,” he said.

The challenges are something that Dr. Brian Galofaro, chief medical officer at Our Lady of the Angels in Bogalusa, sees every day.

“Margins have always been kind of tight for rural hospitals,” he said.

Because rural populations tend to be poorer, health care providers in those areas depend more on Medicaid than many of their urban counterparts. With Medicaid as a chief source of revenue, many rural hospitals are on a razor’s edge. 

In addition to low margins, many rural hospitals struggle to attract doctors. And more and more medical school graduates are opting for lucrative subspecialties instead of the general practice physicians needed in rural areas.

Some are attempting to address these issues.

Our Lady of the Angels hosts a rural family medicine resident program, where newly minted physicians spend three years working before they are able to go out on their own. Galofaro was the first graduate of the program. Five of its graduates have remainedin Bogalusa, he noted.

VCOM, a new medical school that opened in 2020 in a partnership with the University of Louisiana Monroe, is specifically geared to address the rural doctor shortage. Its first class is scheduled to graduate this spring. The school aims to graduate about 150 students per year.