Understanding Rural Hospital Bypass by Patients with Commercial Health Insurance

• In Event: When Distance Matters: Rural Healthcare Access and Disparities

Abstract

Background: Patient volumes at rural hospitals have decreased steadily over the last decade, limiting revenues and making it difficult for hospitals to cover the fixed cost of delivering care. A key factor driving low patient volumes at rural hospitals is hospital bypass – when rural residents “bypass” their nearest hospital and seek care farther from home. Hospital bypass has generated attention among policy makers because it threatens rural hospital finances, yet research on bypass is relatively narrow. While bypass among Medicare beneficiaries has been documented, little is known about bypass among commercially-insured patients. Because commercial insurance pays more than Medicare for the same services, loss of commercial patients through bypass is especially harmful for hospitals’ financial health. Moreover, commercially-insured patients may exhibit different bypass behavior than Medicare beneficiaries because they are younger – which may lower barriers to travel – and have different clinical conditions. In this study, we assessed the extent of rural hospital bypass among commercially-insured patients and implications for foregone revenue at rural hospitals.

 

Methods: We used commercial claims data from the Health Care Cost Institute to study rural hospital bypass among patients with commercial insurance between 2012-2021. Our sample included commercially-insured patients living in rural (non-metropolitan) zip codes. We defined bypass as when a patient received inpatient care at a hospital that was not their nearest hospital. We calculated annual bypass rates, as well as hospital revenues generated by patients who bypassed their closest hospital. We also characterized variation in bypass rates across patients’ clinical conditions and level of rurality.

 

Results: Our study included 2,234,974 hospitalizations of rural residents. Seventy-two percent of rural patients with commercial insurance bypassed their closest hospital between 2012-2021. Bypass rates grew over time from 68% in 2012 to 74% in 2021. Patients who bypassed their closest hospital accounted for $3-5 billion dollars in hospital revenue each year. Bypass varied across clinical conditions, with bypass rates ranging from 60% among patients with respiratory conditions to 90% among cancer patients. About 65% of patients giving birth bypassed their closest hospital. There was also variation in bypass rates by rurality. While patients in micropolitan areas had bypass rates at 64%, patients in the most isolated rural areas had bypass rates of 84%.

 

Discussion: There was substantial bypass of rural hospitals by commercially-insured patients between 2012-2021, which reallocated considerable revenue away from rural hospitals. As a result, hospital bypass may threaten the health of patients who depend on local hospitals to meet their health care needs. Yet, people who travel for care may be better off if they are treated at higher-quality hospitals when they bypass their local facilities. As rural hospitals continue to struggle with low patient volumes and profitability, our results provide a foundation for policy discussions about how to balance access and quality of hospital care in rural areas.

Author

• Jessica Chang, University of Minnesota - Twin Cities
  Presenting Author