Across the U.S., hospitals serving rural areas have spent decades trying to provide medical care and produce enough revenue to stay open. They have closed in increasing numbers in recent years as local populations have declined. About 170 rural hospitals have shut down since 2005. Some nonprofit or community-owned hospitals, like the three Alecto had bought in West Virginia and Ohio, turn to for-profit hospital chains as a lifeline, hoping that a focus on generating revenue could help them survive. But for-profit hospitals are more likely to close than the others, one recent federal study showed. It found that for-profit facilities accounted for 11 percent of rural hospitals but 36 percent of closures among the group. Within the past year, rural hospitals have closed in Pennsylvania and Tennessee after selling to for-profit chains. Michael Sarrao, Alecto’s general counsel, said the company had done everything it could to turn the three hospitals around but ultimately found the financial challenges insurmountable. Slow reimbursements by health insurers and cuts to Medicare reimbursement rates were factors, he said. He contended that the institutions would have closed years ago had Alecto not purchased them, and that the company lost tens of millions of dollars investing in the facilities.
