Kentucky Association of Counties

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The Kentucky Association of Counties

$20 million allocated to rural hospitals in 2021 session

By Gracie Lagadinos, Government Affairs Associate
HB 556, sponsored by Rep. Danny Bentley and co-sponsored by Rep. Jason Petrie, allocates $20 million to the Rural Hospital Operations and Facilities Revolving Loan Fund.

Health care services are extremely important in every community but often a challenge to find in rural areas. A hospital in a community is prized for its healthcare delivery and the economic impact it can have on an entire region. 

Since 2014, four rural hospitals in Kentucky have closed. 

According to Navigant Consulting Inc., 16 additional rural hospitals in the state are at high risk of shutdown, and 35 more in poor financial health.

“Not only does the health sector constitute about 14 percent of total employment in Kentucky’s rural communities, but hospitals and the clinics they own are also one of the highest-paying employers in a rural area,” said Julia Mattingly, co-founder and managing editor of Louisville Political Review. Click here to read more about rural hospitals in Kentucky. 

One of the prominent reasons rural hospitals are at high risk of closure is their dependence on federal Medicaid reimbursements. These payments are often delayed by months and even years while waiting to be processed by the federal and state government, resulting in low cash flows for the hospitals. 

Another top funding source is elective procedures. 

Due to the COVID-19 pandemic, hospitals across Kentucky were ordered to cease elective procedures to mitigate the spread of COVID-19. While these restrictions have since been lifted, the financial health of many hospitals was negatively impacted.

HB 556, sponsored by Rep. Danny Bentley (R- Boyd (part), Greenup) and co-sponsored by Rep. Jason Petrie (R- Logan, Todd, Warren (part)), allocates $20 million to the Rural Hospital Operations and Facilities Revolving Loan Fund, which was created (but not funded) last year under HB 387, also sponsored by Bentley. 

The fund is available to hospitals in rural counties, defined for this purpose as hospitals in counties having a population of fewer than 50,000. 

Kentucky Association of Counties
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