Hospitals across the country are closing. As bad as that is, rural towns get hit especially hard. Over the past decade, 10% of rural hospitals shut their doors for good. These were the numbers before the pandemic. The pandemic crushed hospitals. Rural towns suffer when they can't get prompt treatment.

We have a saying in cardiology when someone is having a heart attack, "time is myocardium". Meaning, when someone is having a heart attack, every minute lost is another bit of that valuable muscle lost.

So why are hospitals closing? They can't meet their costs. In the video above, the CEO said his hospital was losing $500,000-750,000 (he didn't explicity say this but this is likely every year)

Most hospitals are in a fragile position due to low patient volume and reliance on Medicare and Medicaid for reimbursement. COVID was the final straw.

Hospital economics are complicated. Hospitals provide care and handle the upfront costs assuming that someone will pay for the services we provided.

It's like going to a bar and putting your drinks on a tab.

At the end of the night, insurance companies can choose to pay the bill or not. Like my mom going through receipts at Sam's Club, insurance companies will go through the bill line by line and say what they will pay for.

Here's the funny part.

Insurance companies have the power to tell hospitals what tests and treatments were appropriate. They go through that receipt and say, "that seems reasonable" or "we're not paying for that". Then, insurance companies can choose how much they pay. You know they're not going to pay top dollar for all the top-shelf stuff either. Whatever the insurance company doesn't pay is then passed on to the patient to pay.

Casinos don't get big, flashy buildings if they're losing money. Similarly, insurance companies are not successful publicly traded companies if they're losing money. The top two insurance companies, UnitedHealth Group and Anthem Inc, both have rising stock prices. This means they’re making profits and only way they make profits is if they’re keeping more and more money.

Medicare/Medicaid (CMS) often pays the least to hospitals for any treatment. Hospitals are kind of forced to accept whatever CMS will reimburse.

To go back to our bar analogy, if hospitals don't like how much CMS feels like paying them, CMS will walk out of the bar without paying. This tends to scare hospitals because CMS covers A LOT of people.

So hospitals take CMS patients and hope to make up the costs from other services and other insurance companies.

Hospitals, unfortunately, need money to offer services and provide life-saving care. Insurance was originally created in 1929 by hospitals to ensure that money was coming in throughout the year to keep the lights on. As insurance grew it became bigger and bigger and now influences the way that medicine is practiced in the United States.

Now hospitals are shutting down in rural parts of the country despite a great need.

No one wants to pay for healthcare. Not you, not me, not the insurance company that you pay to pay for healthcare. The difference between us commoners and insurance companies is that the insurance companies can pass the bill to people like you and me. Anyone that's been in the healthcare system in the greatest country in the world can attest to that.

In college, my philosophy professor saw a pizza shop in a college town go out of business. He was in disbelief as college kids are almost always eating pizza. How does a pizza shop go out of business with thousands of college students around? It gives away too much pizza for free.