HJAR May/Jun 2025

42 MAY / JUN 2025 I  HEALTHCARE JOURNAL OF ARKANSAS RURAL HEALTH COLUMN RURAL HEALTH IN FEBRUARY, the healthcare consulting firmChartis issued a report estimating that 46% of rural hospitals nationwide have neg- ative operating margins and that 432 are vulnerable to closure. The determination of vulnerability is based on an analysis of 10 factors that Chartis said are statistically significant indicators for estimating the likelihood of closure, such as years with a negative operating margin, changes in net patient revenue, and occupancy levels. The report notes that the percentage of rural Arkansas hospitals deemed vulnerable to closure, 50%, is the highest in the nation. 1 This is a troubling statistic. Unlike rural hospitals in most other Southern states, Arkansas’s rural hospitals were offered a lifeline in 2014 when the Ar- kansas General Assembly expanded Med- icaid for low-income adults through the program now known as Arkansas Health and Opportunity for Me, orARHOME. More than 718,500Arkansans — nearly a fourth of the state’s population — have been enrolled at some point in the Medicaid expansion program. 2 The resulting reduction in un- compensated care costs and increase in revenue from services provided to newly insured adults proved to be lifesavers for rural hospitals operating on thin margins. Federal pandemic relief funds have also helped the state’s rural hospitals avoid clo- sure. In addition to direct federal assistance early in the COVID-19 pandemic, in 2022, the Arkansas General Assembly set aside $60 million inAmerican Rescue PlanAct money for hospitals, which continued to deal with workforce and cost challenges stemming from the pandemic. Nearly all that funding has now been distributed, however, and in- flationary costs for staff and supplies have taken hold. Stagnant Medicare and Medicaid reim- bursement rates pose increasingly difficult challenges for hospitals struggling with ris- ing costs — especially rural hospitals, which are more likely to have Medicare and Med- icaid patients than hospitals in urban areas. Rural hospitals also continue to face long-standing challenges such as low patient volumes, older populations due to the outmigration of young people to urban areas, limited resources compared to urban hospitals, aging facilities, difficulties keep- ing up with new technology, and workforce recruitment challenges. Rural hospitals and the communities they serve are desperately searching for alternatives to closure. Some are jettison- ing services that may be strongly desired by communities but are financially challeng- ing to maintain, such as labor and delivery services. As of February, only 33 hospitals in 25 of Arkansas’s 75 counties offered labor and delivery services; seven hospitals in the state have closed their obstetric units since 2019. 3 When a hospital closes its labor and delivery unit, mothers in the area have to travel farther for care, which can increase the risk of adverse maternal and perinatal health outcomes. 4 An analysis by theArkan- sas Center for Health Improvement found that, for example, the median travel time to a birthing facility for Phillips County resi- dents increased from6minutes in 2016 to 51 Craig Wilson, JD, MPA Interim President and CEO Arkansas Center for Health Improvement With half of Arkansas’ rural hospitals at risk of closure — the highest rate in the nation — the stakes couldn’t be higher.These hospitals are lifelines for their communities, and losing themmeansmore than just longer drives for care, it means lives on the line. In the scramble for solutions, private equity has emerged as a potential savior — bringingmoney andmanagement, sure. But let’s be clear about what’s really at risk here. In rural towns, where the hospital may be the largest employer and the only source of emergency care, those decisions cut deep. That is why I turned to my most trusted source and dear friend, CraigWilson, to dig into what is really at stake. -Mellie Boagni Arkansas’ Rural Hospitals Face Uncertainty: Private Equity Investment Seen as Promising but Risky