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Some of NC's rural hospitals struggle the most financially. Race and economics play a role

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Rural hospitals struggling the most financially in North Carolina are in poorer counties with higher unemployment rates and greater populations of Black and Latino residents. North Carolina Health News reporter Clarissa Donnelly-Deroven looked into the data, and she joined WFAE's Gwendolyn Glenn to explain what she found.

Gwendolyn Glenn: Give us a sense of these rural counties in North Carolina. What are the income levels and other demographics?

Clarissa Donnelly-Deroven: According to data from the North Carolina Rural Center, the average makeup of rural North Carolina, it's about 67% white, 19% Black, 8% Latino, 2% Indigenous, and the median household income is around $50,000.

But for the counties that we looked at, they all either were poorer, had higher rates of residents who are poorer than that average, or they had rates of residents of color that were higher than that, or they were often close to metro areas.

Washington County, for example, nearly 50% of residents in that county are Black, and nearly 50% make less than $35,000 a year.

Glenn: So when comparing state data with a national survey of rural hospitals from 2019, how did North Carolina's hospitals reflect the nationwide study?

Donnelly-Deroven: The nationwide study found that rural hospitals that closed over the last 10 years tended to be in counties with higher rates of Black and Latino residents. They were poorer and they were closer to metro areas.

We decided to look at the rural hospitals, not that have closed, but that have financial indicators that mean they could close if nothing else happened. Essentially, what we found is that every rural hospital in North Carolina that had negative assets and negative margins, which are the two financial indicators that mean that a hospital is in financial trouble, all of those were in counties that shared the characteristics that this national study found.

Glenn: Negative assets and negative margins — meaning they're spending more than they're taking in. In your report, there are six hospitals that fit that category. Where are those hospitals?

Donnelly-Deroven: So they are in Washington County, Person County, Granville County, Bladen County, Wayne County and Avery County.

Glenn: What are the factors that are affecting the bottom line for these hospitals?

Donnelly-Deroven: For a lot of rural hospitals, they have a lot of uncompensated care, which means that they are caring for people who either don't have insurance or who have Medicare and Medicaid, which reimburse hospitals for care generally at lower rates than private insurance.

Avery County, for example, I think the rate is 27% — it might be 23% but it's in the 20s — of non-elderly workers who don't have insurance. This just means that a significant portion of the people in that county are going to need care at some point, but they're really unlikely to pay for it. And so the hospital is likely to provide that care, and they're not going to be paid for it.

Glenn: Now are the conditions that they are experiencing or are they different from other hospitals around the state?

Donnelly-Deroven: All rural hospitals struggle with uncompensated care. But what is particular is the role that race and ethnicity play. One (of the researchers) I quoted in the story said that it's not only a rural issue that have many residents of color see hospitals pulling away. It's a pattern that's repeated in urban and rural areas, that in neighborhoods and communities where there are lots of Black and Latino residents, hospitals engage in something called “medical gentrification,” which is where through the hospital's growth, low-income residents of color are priced out.

And so there are some unique financial factors that impact rural hospitals, but the issue of how race and ethnicity plays into access to health care and health equity, that's something that's consistent regardless of where a hospital is.

Glenn: Even if the income levels are the same, in terms of insurance that's the same, why is it that when you add in people of color, it's such a major problem?

Donnelly-Deroven: There's not one clear answer. There's a lot of research that looks at why this exists. And one study found that white physicians are less likely to practice in hospitals that serve large communities of color or that see patients who are on Medicaid at high rates. And so I think that that speaks to either implicit or explicit bias.

But I think that there are also all of these different factors. Like racism doesn't like ever occur on its own, right? It happens at the same time that there's economic disenfranchisement of communities of color. And there are just all these ways in which these different oppressive systems intersect and disproportionately harm communities of color. And then in this example, notably rural communities of color.

Glenn: So what will you be watching for when the new data comes out?

Donnelly-Deroven: I'm going to look at these six hospitals, in particular, to see what changed. Did their margins go up? Did they go down? Did their assets go up? Did they go down? And I'm also going to be looking for any new rural hospitals in North Carolina that are now showing that they have negative assets and negative margins, which are the two factors that researchers say can point to a hospital being in financial trouble.

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Gwendolyn is an award-winning journalist who has covered a broad range of stories on the local and national levels. Her experience includes producing on-air reports for National Public Radio and she worked full-time as a producer for NPR’s All Things Considered news program for five years. She worked for several years as an on-air contract reporter for CNN in Atlanta and worked in print as a reporter for the Baltimore Sun Media Group, The Washington Post and covered Congress and various federal agencies for the Daily Environment Report and Real Estate Finance Today. Glenn has won awards for her reports from the Maryland-DC-Delaware Press Association, SNA and the first-place radio award from the National Association of Black Journalists.