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Shuttered Hospital in Hammond, Indiana Exemplifies Ongoing Struggle for Rural Healthcare

May 3, 2023


People in rural areas have higher mortality rates than people living in urban areas in part due to limitations on access to health care, like distance to care and lack of transportation, and being uninsured or underinsured. Provider shortages and hospital closures in rural areas also impact access to care. The closing of a hospital in Indiana provides insight into the factors that make delivery of healthcare in rural and underserved areas such a challenge.

The health of people living in rural communities is influenced by a variety of factors, including the availability of primary and speciality care providers, insurance coverage, income and education levels, and transportation. People in rural areas have higher mortality rates than people living in urban areas in part due to limitations on access to health care, like distance to care and lack of transportation, and being uninsured or underinsured. Provider shortages and hospital closures in rural areas also impact access to care. More than 60 percent of health professional shortage areas are in rural communities. Since 2005, there have been 190 rural hospital closures or conversions, with a record 19 closures in 2020 alone.

Rural hospitals provide a variety of services, but in recent years many have had to convert to emergency services only, or in some circumstances, close completely. In an Issue Brief published by the Kaiser Commission on Medicaid and the Uninsured, some of the factors leading to closures or conversions include population declines, high rates of uninsurance, changes to Medicaid and Medicare payments, and other economic pressures. While these hospitals face challenges maintaining adequate staffing and staying financially viable, their closure can have a profound impact on the health and wellbeing of the communities they serve. The recent closure of Franciscan Health Hammond (FHH) in Hammond, Indiana has brought these issues to the forefront yet again, serving as another case study of similar issues raised by rural hospital closures.

FHH operated in Hammond for more than 100 years, but in 2021 announced that it would be downsizing, primarily maintaining its emergency department and providing a limited number of other services (including prenatal and primary care). Then, in November 2022, FHH informed the City of Hammond of its intent to close by December 31, 2022. While the hospital has since closed, it was not without  legal challenge. The City of Hammond sought a preliminary injunction that would have required the hospital to stay open, however, Indiana’s Court of Appeals stayed that injunction, enabling FHH to close in December of 2022. (see Franciscan Alliance, Inc. v. City of Hammond, Indiana, Ind. Ct. App., Cause No. 22A-PL-3085).

Hammond argued that the hospital’s closure would cause immediate and irreparable harm, and keeping it open would serve the public interest by continuing to provide emergency medical services to its 80,000 residents. The city also argued that failure to enjoin Franciscan Alliance from closing the emergency department could lead to fatalities resulting from a lack of emergency medical services. The city’s main legal argument was under the doctrine of promissory estoppel, based on the claim that the hospital had promised to maintain an emergency department when it downsized in 2021.

FHH challenged the city’s legal standing and disputed claims of emergency care loss, citing the fact that during the previous two years residents had been transported to other hospitals. FHH also noted its financial difficulties, which included an annualized loss of $39 million in 2022, and argued that requiring the hospital to remain open would constitute an unconstitutional taking. Importantly, FHH noted that it had terminated provider contracts and that its Indiana Department of Health hospital license would expire on December 31, 2022, rendering the hospital unable to actually provide services or to do so as an unlicensed entity and in the process delay care that would have otherwise been provided by nearby hospitals. For the full case record, search the Indiana Judicial Branch for City of Hammond, Indiana v. Franciscan Alliance, Inc., Ind. Super. Ct., Cause No. 45D11-2212-PL-000707.

Rural communities rely on local hospitals for healthcare, and closing them can leave residents with limited options, forcing them to travel long distances or go without care. In the FHH case, the issue was whether adequate alternatives were available for emergency care. This is an issue commonly faced by rural hospitals. As noted in the Kaiser Commission Issue Brief above, lack of access to healthcare can have dire consequences, such as delaying treatment and increasing healthcare costs in the long run.

Closing rural hospitals can also exacerbate existing inequities in healthcare access. While the disparities in health outcomes between urban and rural communities are well known, there are also disparities within rural communities. For example, Black and American Indian residents of rural communities have worse outcomes than White rural residents. In addition, people living in poverty and other residents experiencing disadvantage may have fewer options for medical care, leading to worse health outcomes overall.

This lack of access to healthcare can also create a cycle of poverty, as poor health can make it harder for residents to work and provide for their families. According to a study by the University of North Carolina’s Cecil G. Sheps Center for Health Services Research, the percentage of Black and Hispanic residents affected by a nearby rural hospital closure has increased over time.

The closure of the hospital in Hammond is a stark reminder of the challenges that rural and underserved communities face in accessing healthcare. Rural hospital closures can limit and even worsen healthcare access, exacerbate existing inequities in healthcare, and create a cycle of poverty. The long term impact of Franciscan Health Hospital Hammond’s closure remains to be seen. However, identifying the potential impacts and assessing potential policy solutions can help promote more equitable access to healthcare in communities facing similar issues.

This post was written by Madison Hybels, J.D. Candidate, Class of 2023, Robert H. McKinney School of Law, and reviewed by Dawn Hunter, J.D., M.P.H, Director – Southeastern Region, Network for Public Health Law.

The Network for Public Health Law provides information and technical assistance on issues related to public health. The legal information and assistance provided in this document do not constitute legal advice or legal representation. For legal advice, readers should consult a lawyer in their state.

Support for the Network is provided by the Robert Wood Johnson Foundation (RWJF). The views expressed in this post do not represent the views of (and should not be attributed to) RWJF.