In a story for North Carolina Health News, a study completed by the North Carolina Rural Health Research Program and the Cecil G. Sheps Center for Health Services Research at the University of North Carolina Chapel Hill, has uncovered three factors that are present when a rural hospital is in danger of closing.
According to the story, if a rural hospital had low cash, negative operating margins and negative total margins, that facility would most likely close a year or so later.
From the story, written by Clarissa Donnelly-DeRoven: “George Pink, one of the authors, says the study is the first he’s seen to analyze a hospital’s finances in the immediate years before its closure.
“We just wanted to get a handle on the hospitals that did close, compared to hospitals that did not close,” he said. “How were they different?”
Of the 56 hospitals that closed, 47 had less than a month’s cash on hand in the year before it closed. “Cash on hand” is a critical financial indicator that measures how many days a hospital could pay for its operating expenses with the money it has immediately available. Having little or no cash on hand indicates that an organization can’t really absorb some unexpected financial shock, in the case of a hospital that could be a surge of patients or an essential repair.”
The recent Consolidated Appropriations Act of 2021 from Congress could help rural hospital fight closures, with the new designations still being solidified for a release date of 2023.
To read the rest of the story, click here.