New report identifies crucial challenges in Iowa’s health care industry

The overall landscape of Iowa’s health care industry is looking bleak, according to recent findings from the Common Sense Institute (CSI), but still remains “competitive” compared with nationwide trends. The CSI’s new report found that health care facilities in Iowa are closing at a pace that far outnumbers openings, hospitals are increasingly operating at a loss, accessibility in rural communities is dwindling and there’s growing vacancies for hospital personnel. “Health care closures are outpacing openings, but especially since the pandemic, we saw this big spike up in the number of closures since 2020, and we've seen a decrease in the number of openings,” said Chelsea Lensing, CSI Healthcare Fellow and assistant professor at the Stead Department of Business Administration and Economics at Coe College, in a Zoom presentation Aug. 22. Mental health facilities, nursing homes and residential care have been the hardest hit, the report found.

Expenditures rising for hospitals, patients

Hospital operating expenses have been climbing at an alarming rate, the CSI also found. Examining data from 2009 to 2022, the study highlighted a troubling trend: the annual average total expenses for hospitals have been steadily rising, outpacing revenue growth and raising concerns about sustainability. The period between 2020 and 2022 saw a particularly sharp increase, with expenses surging by 16.64%, outstripping the 10.77% growth in revenue. Reflected in that percentage was financial assistance from the CARES Act, a temporary measure that provided crucial, but short-lived, relief. The financial health of Iowa hospitals has been tenuous, even prior to the pandemic. In 2019, profit margins varied significantly across the state, with county averages ranging from a distressing -31% to a modest 12%. The statewide average stood at just 1.6%, underscoring the ongoing challenges faced by the healthcare sector. “Hospitals are an integral part of our health care system, and they are businesses, and they need to to thrive in order to provide those necessary services to our communities,” Ms. Lensing said.

Health care expenditures for Iowans – whether out-of-pocket, private or public health insurance – are also increasing, Ms. Lensing said. Between 1990 and 2020, total health expenditures in Iowa increased by 280% – “three times more than what we saw for inflation,” said Ms. Lensing – according to data from the Centers for Medicare & Medicaid Services, well below the national average of 306%. “It's been shown that a lot of the increasing expenditures we're seeing is driven by prices, as opposed to a difference in quantity of consumption,” she said. “Even though (the rate) is concerning, again, we kind of take a step back and compare it to the rest of the country,” she added. “It’s still slightly below the average increase we saw in prices across the rest of the states.”

Workforce took a hit after 2020

Consistent with nationwide trends is the increase in vacancies for hospital personnel in Iowa, both clinical and non-clinical. In Iowa alone, that number grew 73% between 2020 and 2021. Of the 2,942 additional vacancies, 1,363 were for nursing roles, and 1,307 were for non-clinical positions. “A separate report by Mercer is projecting that by 2026, (Iowa) will have a very large shortage of those low wage health care workers,” said Ms. Lensing – an estimated 36,000, to be exact. The future of the health care workforce can partly be assessed by examining the age of current workers, CSI found. Certain specialties within Iowa’s health care sector have a significantly older workforce compared to others, who will face retirement within the next few years. “If we don't have a strong pipeline of new supply workers coming in, we might see future shortages in these areas of specialization,” Ms. Lensing noted.

Gaps in rural health care concerning

In the course of their investigation, CSI also found a disparity in access to primary care physicians between rural and urban counties. In counties where more than 90% of the population identify as rural, the ratio of primary care physicians to residents is 43 per 100,000 people. In contrast, counties with less than 20% of the population residing in rural areas have significantly better access, with over 90 primary care physicians per 100,000 people. Perhaps most notable is the lack of OB-GYN practitioners within these rural areas. In Iowa’s 77 rural counties, 62 are without an OB-GYN practitioner. This troubling trend has been on the rise since 2000, having seen at least 41 Iowa hospitals shutter their labor and delivery units since then. The lack of health care presence means more rural Iowans are susceptible to premature death, the CSI noted, reporting an 18% increase in premature death since 2015, double the urban amount. Many of these deaths are concentrated in the southern and western areas of the state. “This is not unique to Iowa, but if we again focus on Iowa, both urban and rural counties are seeing an increase in premature death rates, but it's much, much higher in these rural communities,” Ms. Lensing said.

Insurance costs increasing

Staying consistent with the trend of rising health care costs is the expense of health insurance. Focusing on employer-sponsored health insurance, CSI found that total premiums have increased more than 60% since 2009, with employee contributions to premiums and deductibles rising 115%. However, the good news is that Iowa has a very low rate of uninsured individuals, Ms. Lensing said, which ranks seventh in the nation. “In general, we've seen a pretty consistent rate of individuals that have employer-sponsored health insurance, with a decrease in the percent who are uninsured coming from an increase in those who are on publicly funded insurance” like Medicare, she said.

Not unique to Iowa

“There's a lot of challenges, and I think that a lot of those challenges are really not unique to Iowa,” said Ben Murrey, CSI’s director of policy and research, giving an overview of the data.

“Obviously, Iowa has its own data and its own areas where the challenges are more pronounced, for example, in our rural communities, simply because we are a very rural state,” he added. “But Iowa does do very well relative to other areas of the country in terms of its health care competitiveness, and I think that's important to keep in mind. I also think it's important to keep in mind that legislators have passed some legislation to try to address this.” Common Sense Institute gave the example of a few of the following legislative efforts addressing health care:

• HF 2627, passed in 2020 – In an effort to increase supply, this bill funds additional job pathways and removes barriers to licensure in the state. Additionally, it also allows new Iowa residents with an out-of-state license to use their skills and training in the same licensed profession.
• SF 2251, passed in 2024 – extends postpartum Medicaid coverage for new mothers from 60 days to a year, but limits eligibility to families with income at or below 215% of the federal poverty line.
• SF 2252 (MOMs, More Options for Maternal Support) – In an effort to increase maternal care accessibility, this bill improves access for pregnant women and new mothers to pregnancy resource centers. Originally passed in 2022, it has since been updated, giving Iowa HHS the power to directly oversee the program and contract with providers, removing the previous requirement to hire a third-party administrator.

While the state’s health care industry remains relatively competitive within the nation, “It's still really important to understand what those challenges are from an absolute level,” said Ms. Lensing, “because even while we might be better off than some other states, there's still some really big hurdles that we need to improve going forward, to improve our economy and to improve our health.”