The following is part one in a two-part series examining the rising trend of rural hospital closures around the U.S. and the challenges posed when a hospital shuts down. This part focuses on the repercussions of a rural hospital closure in McKenzie, Tenn. The second part will look at the impact of Medicaid expansion, a key issue in the midterm elections, on rural hospitals.

Jill Holland, mayor of McKenzie, Tenn., sat behind her paper-strewn desk and proudly spoke about bringing back the vibrancy of the small, West Tennessee town she remembered from her childhood.

She rattled off a list of community gatherings: a sweet tea festival, a weekly farmers' market, and Nights on Broadway, when the downtown area hosted musical performances. The town had also restored its 78-year-old downtown movie theater. But then McKenzie Regional Hospital shut down in September and now Holland's vision for recovery is in jeopardy.

"You cut back, and you tighten your belt, and you see what you can do," Holland said. "So many people think: Well, it's just a hospital. No, it affects the whole community."

Eighty-nine rural hospitals have closed across the country since 2010, according to the University of North Carolina's Rural Hospital Research Program, which has been tracking each closure. Seven took place this year, and eight in 2017 after a peak of 15 in 2015.

Robin Rudowitz, the associate director for the Program on Medicaid and the Uninsured with the nonpartisan Kaiser Family Foundation, participated in a 2016 study that found rural hospital closures led to a loss of access to healthcare services in general, not just hospital services.

"When the hospitals closed, these communities were losing their access to emergency care," Rudowitz said. "And in many of these areas, there's also been outmigration of healthcare professionals ... so that can exasperate some of the pre-existing challenges around access to specialty care."

Rural hospitals can also be some of the largest employers in the area, so closures can lead to a loss of jobs for the people in the region and a loss of industry for the community overall. In McKenzie, 200 people were out of work when the hospital shut down.

In addition to being major employers in rural communities, hospitals attract professionals and businesses, so a town that loses one can also lose revenue and potential industry. Hospital closures can also prompt people to leave a community, taking their money elsewhere.

A hospital can be worth about $15 million to $20 million for rural towns, according to Bill Jolley, vice president of Rural Health Issues with the Tennessee Hospital Association.

"Even the perception of not having a hospital will sort of preclude those businesses from trying to locate there," Jolley said.

Closures become more common

The trend of rural hospital closures may continue before it gets any better. An August Government Accountability Office report found that 63 rural hospital closures occurred between 2013 and 2017, which is more than double the number of closures that took place between 2008 and 2012.

Jolley, who has spent the last 25 years working with rural hospitals, said that he has never seen such a high rate of closures in his entire career.

"The first half of my tenure here, I can't recall if there were any closures," Jolley said. "Most of the closures we've seen have been over a very short period of time."

Even though Tennessee is home to some of the largest and most well-renowned hospital companies in the country, including those owned by HCA Healthcare Inc. and Quorum Health Corp., 19 of the state's 95 counties do not have a hospital. The state's nine closures since 2013 are the second-highest number of rural closures in the U.S., trailing only Texas' 15 closures.

Tennessee's situation is a combination of complex factors that include declining rural populations, a large number of uninsured and Medicare or Medicaid patients, and recent reductions in Medicare reimbursements that have hurt hospitals' revenues, according to Jolley.

The anatomy of a rural hospital closure

Those same factors played a role in McKenzie Regional's closing, even though it served a wide area — about 5,300 people in the city limits and another 4,000 or so in the surrounding area, plus Carroll County and neighboring counties.

The facility was losing $3 million to $4 million a year in the four years prior to closing, according to Keith Priestley, former chairman of the hospital's board. Priestley said the 45-bed hospital's patient volume dropped to about seven patient visits per day and a 2% reduction in federal Medicare reimbursements, which came from spending cuts that were part of the 2013 budget sequestration, significantly cut into revenue.

Priestley said there was no indication the hospital would be shut down, but he was not completely surprised when hospital-owner Quorum made that decision.

In a statement provided to S&P Global Market Intelligence, Martin Smith, executive vice president and COO of Quorum, said that "supply outweighed demand" when it came to McKenzie Regional. Smith pointed to a patient volume that declined 20% in the last five years as a key reason for the closure.

"Though selling and closing a community hospital is never an easy or popular choice, in the case of McKenzie Regional, it was the most appropriate decision to make," Smith said in the emailed statement.

A hospital closure does not mean that all medical services disappear. Several facilities in Tennessee that have been labeled as closures by the UNC tracker have been consolidated and others have continued outpatient or emergency room services. McKenzie did lose most hospital services, but ambulances still operate in the area and take patients to Baptist Memorial Hospital, which is 11 miles away in Huntingdon, Tenn.

While that does not seem far, during emergencies or on a road that residents say is prone to flooding and closures, 11 miles can be crucial.

"If somebody could have been treated two minutes earlier or five minutes or 10 minutes earlier … that may make a huge difference in whether they live or die," Jolley said.

Jolley added that a distance like 11 miles can also cause patients to not seek treatment in early stages of illnesses and only go when symptoms increase, which can raise healthcare costs.

It can also put a strain on expectant mothers. McKenzie Regional delivered about 300 babies a year, according to Holland. One of the main obstetrician-gynecologists at the hospital now works 40 miles away in Murray, Ky.

'An anchor for our community'

Katherine Cummings, a physician's assistant and associate professor at McKenzie's Bethel University, said that along with the hospital closure, McKenzie has experienced a decline in jobs for years and is just as poor as the eastern, Appalachian part of the state.

While rumors about the hospital closing have always existed, Joseph Hames, who spent the last 18 years as medical director of McKenzie Regional's emergency room, was surprised when he received a notice of closure 60 days before McKenzie Regional would be shut down.

"We didn't really have a whole lot of notice," said Hames, who moved to McKenzie about 20 years ago. "To get credentialed and to go into another hospital, sometimes is three months. So, I've had a little bit of gap … in my work, which has created some issues for our family financially."

Hames now works in the emergency rooms in the towns of Paris and Waverly, Tenn., and is expecting to take positions at two other hospitals. He joked that he did not want to put all of his eggs in one basket this time and so has spread his employment out to several different places.

Like Hames, some former McKenzie Regional employees have been hired by other hospitals in the area, while others took up work at local businesses or are still unemployed.

To make sure that healthcare services are still available for people in the region, Holland, McKenzie's mayor, and other community leaders are exploring options like opening a free-standing emergency room and extending hours at the local urgent care.

However, Holland said that the 50-year-old hospital was deeply intertwined with McKenzie and finding an alternative will be a challenge.

"The hospital has been an anchor for our community," Holland said. "Where do you even start?"