Examining Hospital Closure Risk and Potential Impact of Global Budget Models in Rural Areas: A Social Resource-Based Lens - Since 2005, 194 rural hospitals have closed, primarily in low-resourced areas. The number of rural hospital closures doubled between 2013 and 2017. Despite temporary relief from the Provider Relief Fund during the pandemic, many rural hospitals still face financial uncertainty. Smaller hospitals, particularly in rural settings and facilities in low-resourced communities, are vulnerable to financial shocks due to low patient volumes and reimbursement rates that often fall short of care costs, encountering barriers in recruiting healthcare professionals and providing adequate services. The financial stability of hospitals catering to low-income communities directly impacts their operational capacity and ability to contribute to healthier communities. While hospitals may implement different strategies to survive and provide care to their communities, they generally operate in similar social and financial environments. Understanding how a community's socio-environmental characteristics contribute to hospitals' financial sustainability is essential to address healthcare access and quality of care. One approach is to create a global budget that allows the rural hospital to engage in services outside of the hospital that address community needs and reduce the need for hospitalization. Maryland pioneered this model and has successfully reduced rural hospital closures, highlighting its potential to improve the long-term sustainability of rural healthcare systems on a broader scale. To address this critical gap and evaluate both the financial sustainability of hospitals and the health outcomes of rural populations following closures, the proposed study will integrate comprehensive data sources, including Kythera Labs claims data (Medicare Advantage, Medicaid, and commercial), the Healthcare Cost and Utilization Project, Hospital Cost Reports, American Hospital Association data, Hospital Compare data, and the American Community Survey, and Federal Emergency Management Agency (FEMA). Guided by a multidimensional framework, this project will apply Social Resource-Based View to examine hospital closure risk and the potential effects of all-payer Hospital Global Budget (HGB) models. Leveraging an innovative analytic approach, study will estimate hospital closure risks by incorporating social, environmental, organizational, clinical performance, and process-level factors. It will assess the downstream impact of closures on healthcare service availability, utilization patterns, and the prevalence of chronic conditions (particularly for cardiovascular disease, cancer, stroke, advanced respiratory disease, diabetes, dementia, and hypertension) in rural areas. Drawing on Maryland’s HGB, the project will evaluate the model’s influence on healthcare delivery and financial outcomes. Through counterfactual policy analysis, study will simulate a nationwide adoption of HGBs to project its potential effects on hospital financial sustainability, service provision, and rural health outcomes.
