Category Archives: Economic development

Yet Another Path to Rural Broadband: Other Peoples’ Money

The Pamunkey Indian Tribe… soon delivering broadband Internet from a wireless tower near you.

Speaking of bringing broadband Internet to rural Virginia (see previous post)… PamunkeyNet, a business entity of the Pamunkey Indian Tribe, has received approval from the GO Virginia State Board to develop a plan to bring broadband to Gloucester, Mathews, Middlesex and other rural counties along the Chesapeake Bay.

The newly awarded federal designation of the Pumunkeys as an officially recognized Indian tribe is key to the venture. According to a GO-Virginia document, the project would unfold over three years. GO-Virginia, a state-funded economic development initiative, would provide backing for two years. The Pamunkey-owned project would:

  • Create a network of existing and new wireless towers throughout the Middle Peninsula and George Washington region that will have a high-performance backbone between towers and local access radios on each tower to provide affordable business, residential, and institutional broadband Internet service, and will provide Gigbit fiber services on the Pamunkey reservation.
  • Create a fiber-based Technology Corridor on Route 33 between Rappahannock Community College, the planned Telework Center, and the Middle Peninsula Regional Airport.
  • Design for linkage with Hampton Roads, specifically for VIMS and Rappahannock Community College, and anticipate the benefits of linkages to the south with transoceanic destinations from the MAREA landing point, as well as to the north at Ashburn.

Key to making this happen is Pamunkey access to federal funds — “the sole federally designated tribe in Virginia and a conduit to currently untapped federal resources.”

The project also would involve the Middle Peninsula Planning District Commission, the Rappahannock and Germanna community colleges, ten localities, and two electric co-ops.

Bacon’s bottom line: I’ve just finished reading Nassim Nicholas Taleb’s brilliant and confounding new book, “Skin in the Game: Hidden Asymmetries in Daily Life.” Taleb doesn’t have much use for movers, shakers, and pundits (which would include people like me) who don’t have “skin in the game,” that is, people who, if their analysis proves unfounded, walk away unscathed. One commonly encountered group of skinless gamers is people who play with taxpayers’ money.

If you had to make a prediction, which would you pick to have a greater chance of economic success (that is, recovering the funds invested): Gary Wood’s plan (described in the previous post) for the Central Virginia Electric Cooperative to deliver broadband to its 36,000 customers, or the Pamunkey plan to deliver broadband to a geographic area of comparable size?

I would lay my money on Wood. In a word, Wood has put his ass on the line, and he reports directly to a board of directors, whose members represent the interests of the customer-members of the co-op. If the venture fails, co-op members will take a bath, board members will catch endless flack from their friends and neighbors, and Wood’s career likely will be ruined. I would feel even better if he had some of his own money at stake, but there is a clear line of accountability, and the people involved have a lot to gain or lose. Without knowing Wood personally, I feel reasonably assured that he will do everything within his power to make the project a success.

Conversely, it doesn’t appear that anybody has skin in the game in the Pamunkey deal. There is no indication that the Pamunkeys are putting up any of their own money or that they’ll suffer any loss if the project bombs. Basically, a bunch of bureaucrats are playing with other peoples’ money, and if the project fizzles, there is no discernible impact on any of the participating organizations. Furthermore, participation is so broad and so diffused, there won’t be anyone to hold accountable. The Pamunkeys might tap enough state, federal, and local money to get the broadband service built. But would the project be economical, in the sense of earning back its cost of capital? Who cares? It’s other peoples’ money.

Another Path to Rural Broadband: Electric Co-ops

Service territories of Virginia electric utilities. The CVEC territory is shown in bright blue in the center of the state. (Click for larger image.)

The Central Virginia Electric Cooperative has been delivering electricity to the inhabitants of 14 Central Virginia localities for 80 years. Now it’s planning to provide high-bandwidth Internet connections. The company has announced a plan to invest $11o million to connect all 36,000 co-op members.

Co-op members will be able to purchase 100 megabits per second (mbps) access for $49.99 a month or 1 gigabit per second (gbps) for $79.99 a month, reports the Fluvanna Review.

Keeping the pricing reasonable was important to CVEC President Gary Wood. “I didn’t want this to become a premium service or a luxury service,” he says. Continues the Rivanna Review:

Wood said the project is anticipated to lose money for the first seven years and reach the break-even point in about 11. He admits that “give me $100 million and in seven years, I’ll start bringing you your profits,” hasn’t been the easiest argument to sell, but he believes it can be done with a combination of  loans, grants, state and federal funding and tax rebates.

CVEC is also asking for financial support from each of the counties in its service area.

For a for-profit business, eleven years would be a slow payback. But for an electric co-op, owned by its customers, that might seem like a reasonable proposition.

One objection, I would expect, would revolve around opportunity cost. By taking on a financial obligation of this size, the co-op might be limiting its ability to pursue other projects such as, say, grid modernization or solar energy. Another objection would be risk. What if rural residents aren’t willing to pay $50 to $80 per month for broadband access? Could disappointing revenues put the co-op in financial jeopardy?

But let’s face it, no one else is likely to want to deliver broadband to the rural residents of Central Virginia. This seems like a project that is custom-made for CVEC, and it could provide a model for other co-ops, who cover roughly a third of the geographic expanse of the state.

To Someone with No Skin in the Game, Virginia Beach Entertainment District Sounds Great!

Rendering of proposed new Virginia Beach pier. Image credit: Virginian-Pilot

The City of Virginia Beach is creating a special use entertainment district on the beachfront. There are three main components to the plan: a sports center, a redevelopment project, and a new pier. Developers are getting in on the action. One has submitted a proposal for a double-decker pier with retail and restaurants on one level and fishing on another. If the imaginative artist’s rendering is any indication, the project even could include a skywheel.

A  surf park also has been proposed for the project, which has won the backing from the powerful surf shop lobby. Seven surf shops from Wave Riding Vehicles to Pungo Board House and Whalebone Junction have banded together in a first-time-ever show of support for a development project.

But details have yet to be determined, and the city is soliciting input from citizens on what they’d like to see. Public parking? Fishing from the pier? Bicycle parking? Ride share pick-up/drop-off zone? How about a skywheel or a surfing museum? Fishing contests? Fireworks? Music concerts? Dog water station? (Dog water station? What’s that?)

The more the merrier, I say! As a periodic visitor to Virginia Beach, I’m all in favor of the idea. Virginia Beach is getting a little long in the tooth — nothing much new since the erection of the King Neptune statue — and it could use a big new tourist attraction. I’m tired of taking five-hour drives to Emerald Isle, N.C. My summer vacation dollars are definitely up for grabs.

Best of all from my perspective as a Henrico County resident with absolutely no skin in the game, it looks like Virginia Beach is undewriting the development in a big way, which means the citizens of Virginia Beach would be subsidizing my vacation. The city alludes to those subsidies only briefly in its questionnaire asking for citizen input:

The City is considering using Tourism Investment Program funds, made up mostly of tourism-related taxes and fees like hotel taxes, portions of the restaurant taxes and rental fees, to fund the development of two other projects and parking to support the district.

But WVEC Television lays bare the public commitment:

  • The sports center is set to cost $55 million in public funding
  • The old Dome site project is set to cost $37.5 million in public funding, potentially leveraging more than $200 million in private investment
  • Redeveloping the pier on 15th Street is set to cost $21.5 million in public funding, potentially leveraging more than $200 million in private investment
  • Public funds will also go toward parking facilities and improvements to 18th & 19th streets

I won’t be staying in a hotel — I’ll just bunk in at the family place in Sandbridge — so I don’t expect to pay any lodging taxes. As for restaurant taxes, well, I guess I’ll share those with the good citizens of Virginia Beach, who patronize Virginia Beach restaurants more than I ever will. It all sounds good to me!

Tax Credits for Virginia Coal Mining?

Underground coal mining is a capital-intensive business. Do state tax credits really make a difference?

The House of Delegates has passed a bill sponsored by Del. Terry Kilgore, R-Scott, in the House and Sen. Ben Chafin, R-Russell, that would provide state tax credits for the production of metallurgical coal.

The legislation, which would offer $200,000 in tax credits next year and about $500,000 the year after, is more modest than previous efforts, which would have cost the state some $7.3 million in coal tax credits. But former Governor Terry McAuliffe vetoed those bills, and Kilgore is hoping that the scaled-back version will pass muster with Governor Ralph Northam.

“At some point and time, you’ve got to figure out how to move forward, and this is how we move forward this year,” Kilgore said, as reported by the Roanoke TimesReinstating the credits would help protect the remaining coal jobs in Southwest Virginia’s struggling coalfields region, he added. 

Bacon’s bottom line: Coal production and coal employment have plummeted in Southwest Virginia over the past three decades, and the mountainous region has not found an industry to replace it. I’m not persuaded, however, that $200,000 or even $500,000 a year will make much difference. Virginia has been mining coal for more than a century, and the most accessible coal seams are played out. The remaining coal lies in seams that are either very thin and expensive to mine or deep underground and expensive to mine.

The state is blessed by one thing, however: the high quality of the coal. Virginia coal tends to have the characteristics that make it appropriate for conversion into coke, which is used in making steel. Metallurgical coal, which is currently enjoying an export boom, accounts for 60% to 70% of the coal coming from Southwest Virginia. Deep underground mines cost tens of millions of dollars to develop, and the big coal companies don’t make that kind of commitment unless they have long-term contracts that lock in the price. Compared to the cost of developing a new mine or keeping an existing one open, a half million dollar tax credit sounds like a drop in the bucket. I would like to see the evidence that the tax credit will encourage additional production.

Rather than doubling down on an inevitably declining coal industry — when the coal is gone, it’s gone and nothing can bring it back — I would urge Southwest Virginia’s legislators to consider applying their energy and creativity to diversifying the economy.

I know of two technologies being developed at Virginia Tech that could bring economic benefits to the region. One is a laser sensor that can be deployed in underground mines to detect methane, carbon monoxide, and carbon dioxide for the purpose of averting explosions like the one that killed 29 miners at the Upper Big Branch mine in West Virginia in 2010. That technology, if deployed, could create a significant business opportunity for a Southwest Virginia engineering firm.

Another technology would process gob piles — the mountains of waste resulting from the separation of coal from mineral rock. Gob piles contain considerable coal fines. Another Virginia Tech technology would capture those fines along with other potentially valuable minerals. That innovation holds out the potential for extracting wealth from the massive gob piles dotting the coalfields in Virginia, the Appalachian coalfields, and even the rest of the world.

Then there’s the idea of rebuilding the regional economy in part around outdoor tourism. A half million dollars a year arguably would do a lot more to jump-start positive change in that direction than it would to rejuvenate coal mining. The Bacon family is planning a vacation this fall to New England, and I’m especially looking forward to seeing if the small mountain towns of the People’s Republic of Vermont are bucking the trend of rural decline. I would be delighted if Mr. Kilgore and Mr. Chafin should decide to join us in looking for alternate models of economic development!

Hey, You, Get Onto My Cloud!

Early this month  an obscure Virginia-based company, REAN Cloud, announced a nearly $1 billion deal to provide cloud computing services for the Defense Department, reports the NextGov website. REAN doesn’t build the data centers — it helps customers migrate to commercial cloud environments. Which cloud environments? Amazon Web Services’s cloud environments.

There’s likely to be more business where that came from, as the Defense Department migrates applications, services and data to the commercial cloud. Writes NextGov:

Led by the Defense Innovation Unit Experimental, which acts as a liaison between the Pentagon and industry, the Defense Department is targeting non-traditional suppliers to rapidly provide cutting-edge commercial technologies that address national security and military challenges.

And unlike traditional purchases under the Federal Acquisition Regulation, which can take months or often years to award, [Other Transaction Authorities, OTAs] can be issued in a matter of weeks.

“What we’re seeing is a strong shift in the pendulum of those who’d like to replace regular contracting processes with OTAs,” said Andrew Phillip Hunter, director of the Defense-Industrial Initiatives Group at the Center for Strategic and International Studies.

Right now REAN is working most closely with Amazon, although it is building relationships with Microsoft, Google, Oracle, IBM, General Dynamics and other major players in the cloud. To get this business, cloud providers have to play by the rules that the federal government establishes for procurement. And if they want that business, as a practical matter, they have to maintain presence in the Washington metropolitan area where they can interact with the Pentagon’s procurement administrators — and perhaps influence the making of the rules.

The federal government is potentially the biggest customer in the world for cloud services, and now it is opening up to private competition. Every cloud provider who wants to compete for that business will have to beef up their presence in the Washington region. Serving the Pentagon will require a lot more than building data centers, most of which will end up in Northern Virginia, but developing a lot of back-end programs — perhaps the kind of work that would be performed at Amazon’s HQ2. It doesn’t make sense to serve the federal cloud market in Boston, Denver, Austin, Toronto or other locales frequently mentioned as potential Amazon favorites. It has to be done in the Washington metro — the closer to the Pentagon and other Defense Department markets, the better.

Knowing Amazon’s voracious appetite for subsidies and other kinds of special treatment, I don’t know whether to treat Amazon’s second headquarters as a blessing or a curse. And I’m not venturing any predictions — I’m sure Amazon has many other considerations than the ones described here. But I wouldn’t be be one bit surprised if the company lands in Northern Virginia.

This Bitcoin Mania Is out of Control

If you don’t understand how to mine bitcoin, try reading this Wall Street Journal graphic. You still won’t understand, but at least you’ll have tried. (Click for larger image.)

If people want to invest in bitcoin, or invent competing cryptocurrencies, or dedicate their computers to “mining” bitcoin by solving computationally difficult puzzles, well, it’s a free country and they can do what they want. As a political-policy commentator, I would never advocate banning such endeavors. As a social commentator, I am moved to ask, are these people out of their minds? What a socially useless activity.

As a economic-development commentator,  however, I must cheer the initiative of Frederick Grede, Michael Adolphe, and other principals of Bcause, a company that aspires to become the largest bitcoin mining operation in North America. The Virginia Beach-based company has raised $5 million in funding led by Japanese financial-services firm SBI Holdings and plans to raise more.

A Wall Street Journal article today describes how Michael Poteat, an engineering student at Old Dominion University, started mining bitcoin four months ago. He purchased 20 “mining rigs,” computers that solve complex equations to generate new coins. The 20-year-old kept tripping the circuit breaker in his house, and he struggled to find a place to accommodate his operations. “It’s just difficult as an individual to handle all the logistics,” he says.

Then Poteat came across Bcause, which provides the infrastructure, security, and electricity to enable large-scale bitcoin mining.  The WSJ elaborates:

Bitcoin miners are rewarded with new coins and transaction fees for performing the calculations that make the bitcoin network tick. The more valuable a bitcoin is, the greater the incentive to start mining. But the more miners who participate, the more computations are needed to earn rewards.

The process can be expensive and cumbersome, requiring specialized hardware and large amounts of power. Such challenges have long prompted miners to share space and resources. Now, companies that harbor mining equipment are fielding more requests than ever. …

Bcause is one of the firms that have sprung up to cater to aspiring bitcoin miners. In an old beverage warehouse in Virginia Beach, the start up is running thousands of rigs for clients from the U.S. to Asia. … Bcause has contracts with clients to house about 60,000 mining rigs and will serve retail clients by renting out spare machines, a process known as “cloud mining.” It has about 5,000 machines up and running, and plans to outfit another site in eastern Pennsylvania.

The profitability of mining bitcoin hinges on the cost of buying the mining rigs — the Antminer S9 is the most popular — electricity, and, of course, the price of bitcoin. Right now, despite a recent slide, the price is still high by historical standards, and bitcoin mining is said to be “insanely profitable.”

As a hosting service, Bcause says it is insulated from price volatility because it doesn’t invest in the mining equipment or the cryptocurrency itself. However, it does plan to build out a one-stop shop for trading bitcoin, including a clearinghouse, and derivatives exchanges.

I confess: I don’t get it. I don’t understand what bitcoin is good for, other than as a vehicle for maniacal speculation. I don’t understand how bitcoin mining works. Maybe there is some social utility from all this fevered activity, but maybe we’re just bystanders to the 21st tech-economy answer to the 17th-century Dutch tulip bulb mania. Will bitcoin become the Next Big Thing, like the Internet, that will revolutionize commercial transactions and transform our lives? I don’t know. Will it crash and burn? I don’t know.

Peter Diamandis, serial tech entrepreneur and founder of the X Prize Foundation, spoke at the Richmond Forum earlier this month. He made the case that technological change is accelerating, driven by the geometric increase in computational power and the growing capabilities of Artificial Intelligence. A colleague of Ray Kurzweil, the author who coined the phrase, “The Singularity,” Diamandis said that technology is rapidly approaching escape velocity in which change will no longer be in human hands. So, yeah, it won’t be long before the robots take over.

Curse you, bitcoin!

In a world in which all the rules are changing, how do we know what to do? Will our skills and knowledge be worth anything a decade or two? What will happen to our pension funds and personal investments as half the companies in any given portfolio is disrupted and rendered worthless? Will there be any work to do, or will robots do it all for us? Will there be any purpose or meaning to human existence?

Is Amazon Leaning towards Washington?

In today’s buzz about the location of Amazon’s second headquarters, often referred to as HQ2: There has been an unusual spike in traffic — more than 6,000 views over the past week — for an obscure article in ARLNow, entitled “County Wins Top Environmental Award from U.S. Green Building Council.”

The vast majority of the traffic can be traced back to an internal Amazon page devoted to its HQ2 search, says ARLNow.

Of Amazon’s Top 20 candidates, three are located in the Washington metro area: one each Washington, D.C., Montgomery County, Md., and Loudoun-Fairfax in Virginia. Has the e-retail giant added Arlington to the mix?

Why wouldn’t Amazon lean toward Virginia? The state has a long track record of cooperation with the company on data centers and solar energy. At this very moment, Dominion Virginia Energy has included in its list of proposed grid-modernization projects the expensive burial of a high-voltage transmission line through the Haymarket area of Prince William County to serve an Amazon data center. Although the project would require State Corporation Commission funding, it has raised few eyebrows to date. Amazon jolly well ought to love the Old Dominion.

How Critical Is “High Quality” Electric Power?

Among the more influential business groups backing the Grid Transformation and Security Act of 2018 is the Northern Virginia Technology Council. In a Richmond Times-Dispatch op-ed today, President Bobbie Kilberg outlines her reasons for supporting the legislation, which would repeal the electric rate freeze and plow utility over-earnings into modernization of the electric grid.

Kilberg cites several advantages of an upgraded grid, including faster responses to power outages and greater security against cyber sabotage or physical threats. What intrigued me most was this statement: “High-quality power must be available on a 24/7 basis; even minute disruptions can have serious consequences for technology-dependent businesses.”

What does Kilberg mean by “high-quality” power? My primitive understanding is that high-quality power equates to electric current subject to a minimum of voltage fluctuation and micro-interruptions. Electronic equipment is designed to work at a specific voltage, and one of the great challenges of electric utilities is to maintain stability as customers dial their consumption up and down and as power sources kick in and drop off. That challenge will grow as Virginia comes to rely increasingly upon intermittent solar power. The problems appear to be well understood, however, and technology exists to address the problem. It just needs to be installed.

So, here’s my question: Are tech companies more dependent upon high-quality electric power than ordinary businesses that rely upon computers? Are tech enterprises more vulnerable to minute fluctuations in voltage and frequency? What costs are imposed by variations in electric current that might be imperceptible to the rest of us? Finally, if the quality of electric power is an essential input for tech companies, would modernization of Virginia’s electric grid confer a competitive advantage for the Old Dominion? These questions would seem to deserve greater scrutiny.

If the answer is yes, high-quality electricity does confer a competitive advantage in the tech sector, that introduces an important and under-reported consideration into the debate over grid modernization. There may be multiple paths toward the goal of high-quality electricity — the Grid Transformation Act is not the only way to finance upgrades to the electric grid — but whichever approach we choose, it would be useful to gain a keener clearer understanding of the economic-development stakes involved.

Transparency and Accountability for EDAs

Image credit: Chesterfield Observer

How transparent and accountable should Economic Development Authorities be to the public?

That’s the fundamental issue raised by Sen. Amanda Chase, R-Chesterfield, who submitted a bill that would require local government approval for all EDA grants and budgets. That bill was defeated by one vote in the Senate’s local government committee, reports the Richmond Times-Dispatch, but Chase said she hopes to resurrect it in the near future.

“Bureaucrats who are not elected by the people should not be allowed to dole out taxpayer money,” said Chase. “I’m tired of elected officials abdicating their responsibility so bureaucrats can do their dirty work.”

The bill arises from a controversy in Chesterfield County over county plans to build an industrial megasite in the Bermuda district. The EDA wants to rezone and buy about 1,700 acres of land as a site for potential large, industrial users. The paucity of so-called megasites in Virginia has been identified as a bottleneck to economic development, ruling out the state for consideration by automobile companies, aerospace firms and other large-scale manufacturers. Success in attracting a major manufacturing concern could create $1 billion in investment and create up to 5,000 jobs.

Chesterfield economic developers contend that EDAs are accountable indirectly because authority members are appointed by boards of supervisors, and EDA expenditures of tax dollars are approved in counties’ budgetary process in open meetings. Additionally, all EDA expenditures are recorded by Chesterfield’s accounting department, and the EDA does an annual audit.

But members of a Chesterfield citizens group, the Bermuda Advocates for Responsible Development (BARD), say they have many unanswered questions about EDA expenditures and the proposed megasite.

EDAs have many powers, including the ability to acquire land and borrow money, said Patrick McSweeney, an attorney speaking on behalf of Chase’s bill. “This creates a shadow government potentially in every locality in Virginia. Once a decision is made by these authorities there is little that can be done about it unless they have done something blatantly illegal.”

“There’s no reason that local governments can’t do what they do,” he said. “There’s no reason not to have (EDAs) as an advisory body.”

Bacon’s bottom line: EDAs do spend millions of local dollars, they do issue tens of millions of dollars in municipal bonds, and their decisions do impact local communities. Virginians should insist upon total transparency in decision making regarding the assembly of land and building of infrastructure in industrial parks, and they should insist that elected officials be accountable for multimillion-dollar grants and expenditures. I don’t see how Chase’s bill does EDAs any harm, and I can’t understand why anyone would object to it.

Can We Afford to Let Rural Hospitals Die?

Pioneer Community Hospital in Patrick county before it closed.

By Beth O’Connor

In the January 24th edition of Bacon’s Rebellion, author James A. Bacon poses the question; “Are Broke Rural Hospitals Worth Saving?” He acknowledges that many of Virginia’s rural hospitals are in trouble, but wonders if it makes financial sense to let them die.

The problem with his question is that he is only considering the issue in terms of healthcare dollars and outcomes. The reality is that a small rural hospital means much more to the local community and taxpayers than just a place to go when you have a heart attack.

The National Rural Health Association (NRHA) has published extensive information regarding the distress of rural hospitals and the importance of those facilities to small towns across the country. Since 2010, seventy-nine rural hospitals have closed. 673 additional facilities are vulnerable and could close, representing more than one-third of rural hospitals in the U.S. The rate of closures in rural areas is five times higher in 2016 compared to rates in 2010.

NRHA notes that losing access to healthcare is only one of the negative outcomes.  When a rural hospital closes, the rural economy suffers:

  • In rural America, the hospital is often one of the largest employers in the community. Healthcare in rural areas can represent up to 20 percent of the community’s employment and income.
  • The average critical access hospital — the hospital in Patrick County alluded to in Mr. Bacon’s column was a CAH facility — creates 170 jobs and generates $7.1 million in salaries, wages, and benefits annually.
  • The recession in rural America continues, with 90 percent of all job growth since 2008 occurring in metropolitan areas. If a hospital closes in a rural community, health providers relocate, and the town withers.
  • If a rural provider is forced to close, the community erodes.

That’s right, if a hospital dies the whole town dies. Patrick’s closure is recent, but a quick look at Lee County predicts the future for Patrick. Lee Regional Medical Center closed in 2013; it supported 190 full time equivalent positions.  These were not low-paying, entry-level jobs; these were doctors, nurses, anesthesiologists, therapists. The hospital had been the fourth largest employer in the county; it pumped $11.5 million in labor costs into the local economy every year.

Once those jobs left, other jobs followed. Local clinics as well as ancillary services such as food service and cleaning services struggle without a hospital serving as an anchor. After the hospital closed, the community’s only day care center closed too. Virginia’s elected officials have spent untold hours trying to lure businesses to the Commonwealth, but a town without a stable healthcare system will not land the next business enterprise.

Additionally, when a rural hospital closes the taxpayer suffers:

  • Rural hospitals provide cost-effective primary care. It is 2.5 percent less expensive to provide identical Medicare services in a rural setting than in an urban or suburban setting. The focus on primary care, as opposed to specialty care, saves Medicare $1.5 billion/year. Quality performance measurements in rural areas are on par with if not superior to urban facilities.
  • Critical Access Hospitals represent nearly 30 percent of acute care hospitals but receive less than 5 percent of total Federal Medicare payments.

A ‘bigger is better’ mindset suggests that sending patients to Martinsville or Roanoke would be more efficient and have better outcomes, but the data suggests otherwise.  The healthcare analytics group iVantage has documented that hospitals in rural areas have significantly higher ratings on Hospital Consumer Assessment of Healthcare Providers than those located in urban areas.  This includes:

  • Lower risk-adjusted rates of potential safety-related events.
  • Significantly lower adverse event rates than urban counterparts.
  • Significantly lower rates of post-op hip fracture, hemorrhage, & hematoma.

Mr. Bacon refers to Medicaid expansion as “blunderbuss legislation.” I call it a lifeline. Since 2010, seventy-nine hospitals in rural America have closed. Two-thirds of those were in states that have refused to expand Medicaid, including two in Virginia.

By not expanding Medicaid, Virginia loses $142 million in federal funding every month. Since 2014, the Commonwealth has forfeited over $10 billion in federal funds — our own tax dollars that should have been used to help uninsured adults, hospitals, and businesses.

Others may be content to allow their tax dollars to go to Washington, D.C. and stay there.  I am not.  Virginia taxes should be spent on Virginia people and Virginia healthcare providers.

Because the question is not, “Are Broke Rural Hospitals Worth Saving?”, the question is, “Can We Afford to Let Rural Hospitals Die?”

Beth O’Connor is executive director of the Virginia Rural Health Association.