For decades there was one hospital providing health care services to the entire Van Zandt County in Texas. But since August 4th, Van Zandt Regional Medical Center is no longer in operation.

Across the state, several small-town hospitals are struggling to stay open. Especially Rural hospitals who face many challenges including the recruitment and retention of qualified doctors and nursing staff.

Here are the top 3 reasons why Van Zandt Regional Medical Center recently closed

1. Medicare Cutbacks

Continued cuts to rural providers are creating a hospital closure crisis in rural America, jeopardizing millions of rural patient’s access to medical care and devastating the already fragile rural economy. Currently one in three rural hospitals is in financial risk.  At this current rate of closure: 25% of all rural hospitals will close within less than a decade.

According to MedPAC “Average Medicare margins are negative, and under current law they are expected to decline more and more”. Also, Rural residents are older, poorer, and sicker, and more likely to be dependent on Medicaid and/or Medicare and less likely to have employer sponsored insurance. Those payers comprised 61% of gross patient revenue in 2018.

The health care payment system is designed to work against you. Having a dedicated team of revenue cycle specialists in charge helps to offset the financial burden by making sure that every service rendered in your hospital is billedcorrectly, maximizing your payments.

2. Low Reimbursements from Insurance Companies

Patients in rural markets are generally more socioeconomically disadvantaged or are an aging demographic. So Rural hospitals have a lower revenue, but also have high expenses.

We are hearing tougher negotiations between hospitals and insurance companies. Payers want to pull back on reimbursement rates, but yet hospitals can demonstrate rising costs of delivering care. So there is a natural tension between provider and payer. That tension increases the pressure in smaller hospitals, especially in rural hospitals.

The medical billing process is complex and difficult to manage when working with insurance companies, but with the right processes in place, aided by an experienced team of billing partners, you as a healthcare provider can ensure to quickly collect more of the money you deserve for the care you’ve provided.

3. Financial Burden from Previous Management

According to Jerome Crane, physician assistant for Van Zandt Regional Medical Center, due to the Medicare cutbacks and lack of reimbursements, the new management covered the hospital’s payroll, expenses and debt either from out-of-pocket or through loans for the last three months. He could not say how much debt the hospital accrued or how much out-of-pocket funds the managers spent to sustain the hospital.

The reimbursements on claims filed and the money paid out of pocket by patients are the basis of your hospital. Smrtdo Medical Billing is a full service revenue cycle and healthcare analytics company devoted to improving billing, collections and outcomes for healthcare providers and the patients they serve.

Even though Van Zandt Regional remains licensed under Texas General Hospital, which gained ownership in 2016. The hospital is locally-operated by a board of volunteers who are currently in negotiations with a local physician group that has shown significant interest in assuming control of the hospital.