Rural Hospitals: An Economic Driving Force

Rural Medical Facilities Investment and Improvement Act (RMFIIA)

Hospitals in rural areas are economic drivers.

  • On average, 14% of total employment in rural communities is attributed to the health sector.
  • Rural hospitals are typically one of the top two largest employers in rural areas.
  • The average critical access hospital creates 107 jobs and generates $4.8 million in payroll annually.

As the country’s rural hospitals are preparing for next week’s March on Washington (July 30-31), discussions continue in our nation’s capitol and around the country on how to implement policy measures that avoid sending the U.S. economy over a “fiscal cliff” and continue offering quality healthcare to 51 million citizens in rural communities.  Clearly, in order to correct our current fiscal path major policy changes will be needed to beneficial programs important to many Americans, including those living in rural areas.  Among the top concerns are improving healthcare in rural areas where hospitals rely heavily on Medicare reimbursements that cannot continue at current levels.  Once a hospital in a rural community closes, it is devastating to the local economy.  Physicians, pharmacies and other peripheral businesses will also shutter.

Why Is This Important?

Rural Medical Facilities Investment and Improvement Act (RMFIIA)For economic development to occur in rural areas, quality health services are a critical component to attract business and industry.  While dangerous occupations like farming and mining are prevalent in rural areas, investments provided through government incentives have delivered improved technology and broadband communications to more remote areas of the country that are now giving rise to 21st century businesses considering locations in rural areas.

The Current State of Rural Hospitals

 

Most of our nation’s 2000+ rural hospitals were built under the Hill Burton Act of 1946 and surpass 50 years of age.  Advancements in patient care and medical technology have outpaced these facilities’ abilities to adapt to 21st Century healthcare making them inefficiently obsolete and cost prohibitive to remodel let alone operate.  Many rural hospitals are no longer able to serve their community to its fullest, requiring many rural residents to travel long distances to receive even basic healthcare services.

Today, qualifying for current government grants, loans and loan guarantees are beyond most rural community’s financial ability. Moreover, many of these programs are under the budget axe as Congress tries to overcome budget deficits to save our economy from the “fiscal cliff.”

A Solution: Provide Private Investment Incentives

Clearly a unique and affordable solution is urgently needed to assist rural communities in replacing our antiquated rural hospitals. Future federal and state healthcare policies must have a long-term focus and help rural areas transition into 21st century healthcare providers.

Without question, large scale infrastructure and technological upgrades will be needed. To achieve the needed advancements in rural healthcare future policies must:

  • promote strategies that achieve an appropriate balance of:
    • providing the multiple disciplined healthcare needs in rural areas, and
    • creating efficiencies that meet economic realities
  • promote more business-acclimated and competitive healthcare system, and
  • incentivize private investment.

health care jobs created in rural hospitalsIncentives to Jobs, Improved Healthcare

The policy debate continues on how to develop long-term solutions to successfully inject the needed capital into the ailing rural healthcare infrastructure and obtain 21st century medical technology.  Clearly there is a need for public-private cooperation, but to date no incentives have been provided for private investment into the system.

The Rural Medical Facilities Investment and Improvement Act (RMFIIA) is draft legislation that, if enacted, will provide the needed incentives for private investors to offer adequate capital and enter into public-private agreements to improve rural healthcare.  The RMFIIA is modeled after the Small Business Investment Company (SBIC) program, part of the U.S. Small Business Administration (SBA) that was created in 1958 to fill the gap between the availability of venture capital and the needs of small businesses in start-up and growth situations.

The RMFIIA allows:

  • hospital administrators and non-profits to continue administering quality healthcare programs,
  • portfolio management and investment decisions to remain with qualified private fund managers, and
  • certified hospital construction crews to build 21st century healthcare facilities where proven feasible.

Cansler Consulting is an experienced lobbying firm in Food and Drug safety, budgeting, agriculture, rural healthcare, and energy policies and through our Congressional relationships we can help you influence the policy makers on Capitol Hill. You can contact us at info@canslerconsulting.com or at (202) 220-3150.

Tim Cansler
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