Declining Health Care Systems

AUBURN, APRIL 5---Changes in the Medicare payment policy created by the Balanced Budget Act (BBA) of 1997 may hurt more than just small rural health care.

When the BBA reduced the availability of Medicare-supported outpatient payments, home health services and skilled nursing care, the likelihood of 100 or fewer bed hospitals being able to remain profitable diminished. When hospitals can't make money, they are likely to close and individuals employed by the facility lose their jobs.

While hospital closures and other health care facility reductions initially impact the elderly and the fragile, the potential for other devastating effects on the small, rural community is tremendous, says Dr. Jacquelyn Robinson, a community workforce development specialist with the Alabama Cooperative Extension System. For example, a hospital with 65 employees would actually provide an employment base for around 350 people, generating more than $7 million in income, spending about $2.3 million annually, and paying more than $60,000 in sales taxes--not counting property taxes, vehicle taxes, etc.

People tend to associate a decrease in the amount and quality of health care with how far they have to travel to see a doctor. Sadly, the cutbacks due to financial stresses created by the reduction in Medicare payments to health care systems in rural areas are part of a bigger, more complex issue, says Robinson.

Reduction in health care services represents a reduction in jobs. The health care system in rural communities often provides for 10 to 15 percent of the total employment. The hospital is often the second largest employer in a rural community. When these hospitals close or reduce or cut out health care services, the direct employees lose jobs. Furthermore, as jobs are eliminated, money spent in the local economy and the corresponding tax dollars are also eliminated. Also, if health care employees can't find other jobs in the area, the community risks losing them entirely.

When rural communities lack quality health care, their ability to attract and retain retirees also is limited. Many rural towns have the climate and activities desired by retirees who often have substantial net worth. Retirees' net worth translates into purchasing power, which significantly contributes to the economy. In addition, the business of attracting, retaining and caring for retirees creates a need for other types of services, thereby creating more jobs and further boosting the economy.

A community's ability to attract and or retain existing business and industry is also limited without good health care facilities. When businesses and industry make a location decision, a community's ability to assure quality health care at a reasonable price is extremely important, adds Robinson. When faced with a choice between two comparable sites, companies often choose the site with low-cost health care. Seventeen percent will use health care services as a tiebreaker.

With reduced availability of medical care, the likelihood of families moving away will increase, while the likelihood of new businesses bringing more families will decrease. As the tax base decreases, either services will decrease or taxes will increase, both of which make it extremely difficult for a community to grow.

SOURCE: DR. JACQUELYN ROBINSON, Extension Community Workforce Development Specialist, Alabama Cooperative Extension System, (334) 844-5353