New clinic closings reignite fears about rural care

State of play: Three health clinics in rural Virginia will be consolidated and patient care moved to other facilities, Augusta Medical Group announced last week.

• The change is "part of Augusta Health's ongoing response to the One Big Beautiful Bill Act and the resulting realities for healthcare delivery," the provider said.
• Curtis Medical Center in Nebraska, the first health provider to cite Medicaid changes as a reason for closing, will shut its doors on Sept. 30, per the Washington Post.
• At least three rural health centers in Maine have announced plans to close this month, Portland's WMTW reported.
• Mayo Clinic last week said it's closing six clinics in southern Minnesota, including in rural towns, and reducing services at a hospital in the area, although a spokesperson told Axios the transition isn't tied to the new law.

Zoom out: Nearly 200 rural hospitals have closed or ended inpatient services over the past two decades, far outpacing expansions or facility openings.

• Almost half of rural hospitals operated at a loss in 2023, according to the American Hospital Association.
• "Rural hospital financing has not worked well for a long time," said Carrie Cochran-McClain, chief policy officer for the National Rural Health Association.

The tax and spending package Congress passed in July is widely expected to add to the financial difficulties in rural areas, where patients are often poorer and older and where there are fewer private coverage options.

• Federal Medicaid spending in rural areas could decrease by $137 billion over the next decade, KFF estimates.
• The law established a $50 billion rural health transformation fund to be doled out to states over five years, in part to assuage Republican lawmakers' concerns about how Medicaid cuts would hit providers.
• The size of the fund has been panned as inadequate. That, and ambiguity over how funds would be distributed, is raising concerns about whether funds will reach the hospitals that need it most.
• "Some good things will come out of it," Cochran-McClain said. But it's "yet to be determined how much of this will move the needle on some of the long-standing reimbursement sustainability challenges."

Reality check: While the law's full effects may still be years away, facilities have to start making long-term contingencies, Cochran-McClain said.

• Unreimbursed care is already eating away at operating margins, and higher labor costs and shortages of doctors and nurses are forcing some hospitals to cut less profitable services like maternity care.
• Some hospital groups note that distribution of dollars from the rural health fund will occur before many of the big spending cuts under the law are fully realized.
• The new law also lowers the limit on most provider taxes, an important source of revenues that helps states finance their share of Medicaid costs.
• "Facilities who may be on the brink are going ahead and making the tough choice to close their doors knowing that there's no relief in sight, and if anything, situations are probably going to get harder," she said.

What's next: Democrats see rural health closures as a potential campaign issue in the 2026 midterm elections, since overwhelming majorities of Republicans voted in favor of the package.

• "The One Big, Ugly Law is devastating rural hospitals in Virginia and across the nation. This nightmare must be stopped," House Minority Leader Hakeem Jeffries (D-N.Y.) posted on X last week.