Federal Medicaid cuts approved under the new Republican budget law could put 10 Virginia hospitals at risk of closure, according to a new report that warns financially fragile facilities may be forced to scale back care as funding shrinks.
The analysis, released by the left-leaning advocacy group Public Citizen, identified 446 hospitals nationwide serving nearly 7 million patients that face elevated risk of closure or service reductions.
Hospitals were flagged if at least 20% of their revenue came from Medicaid or other low-income government programs and if they posted negative net profit margins on average from 2022 through 2024.
Among the Virginia hospitals listed is Bon Secours Southern Virginia Regional Medical Center in Emporia, the closest affected facility to Hampton Roads. If that hospital were to close, residents there could face drives of 40 minutes to more than an hour to reach the next nearest hospital.
“If all of the funding cuts in the budget reconciliation package come to bear, Virginia hospitals are looking at an annual loss of more than $2 billion in funding, and they will almost certainly have to adjust their operations in various ways to account for that loss of funding,” said Julian Walker, vice president of communications at the Virginia Hospital & Healthcare Association, a trade group representing health systems around the state.
The report comes as Virginia hospitals brace for the long-term effects of the federal budget reconciliation package, known as HR1, which the Congressional Budget Office estimates will cut nearly $1 trillion in Medicaid funding over the next decade.
That would pose a significant impact on hospitals that depend more heavily on Medicaid reimbursements that often do not cover the full cost of care, Walker said.
He said under current Medicaid rules, Virginia hospitals receive supplemental payments through a financing mechanism tied to hospital revenue, meaning hospitals pay into the system based on how much revenue they generate, while the extra Medicaid funds are distributed according to how many Medicaid patients they serve.
“In Virginia rural hospitals, on average, 73% of inpatients are Medicaid and Medicare,” Walker said. “That means about three-quarters of patients are covered by programs that reimburse below the actual cost of care.”
For some rural hospitals, Medicaid supplemental payments make up more than 20% of total revenue, and in some cases as much as 30%, Walker said.
He said hospitals are unlikely to absorb losses of that scale without operational changes.
Those changes could include reducing staffing, consolidating services across locations or eliminating certain departments, which may force patients to travel farther for care or wait longer for appointments.
In Farmville, Centra Southside Community Hospital recently closed its labor and delivery unit, OB-GYN surgical services and outpatient women’s care, citing financial and operational challenges.
Jenna Green, communications manager for Bon Secours, said in a statement to WHRO that “our doors remain open to serve our community and patients.”
