Rural Hospital Closures: Number and Characteristics of Affected Hospitals and Contributing Factors

Research has shown that hospital closures can affect rural residents' access to health care services and that certain rural residents—particularly those who are elderly and low income—may be especially affected by rural hospital closures.

This report describes (1) how HHS supports and monitors rural hospitals' financial viability and rural residents' access to hospital services and (2) the number and characteristics of rural hospitals that have closed in recent years and what is known about the factors that have contributed to those closures.

GAO reviewed documents and interviewed officials from HHS and HHS-funded research centers; analyzed data compiled by HHS and an HHS-funded research center, with a focus on 2013 through 2017—the most recent year with complete data; reviewed relevant literature; and interviewed experts and stakeholders. GAO identified hospitals as rural if they met the Federal Office of Rural Health Policy's definition of rural.

GAO provided a draft of this report to HHS for comment. The Department provided technical comments, which GAO incorporated as appropriate.

The Department of Health and Human Services (HHS) administers multiple payment policies and programs that provide financial support for rural hospitals and funds research centers to monitor closures and study access. Among the payment policies administered by HHS are special payment designations for rural hospitals in which rural hospitals that meet certain criteria receive higher reimbursements for hospital services than they otherwise would receive under Medicare's standard payment methodology. HHS-funded research centers monitor rural hospitals' profitability and other financial indicators, and study access to facilities and specific services. HHS uses the results of monitoring activities to inform future areas of research and disseminate information.

GAO's analysis of data from HHS and an HHS-funded research center shows that 64 rural hospitals closed from 2013 through 2017. This represents approximately 3 percent of all the rural hospitals in 2013 and more than twice the number of closures of the prior 5-year period. GAO's analysis further shows that rural hospital closures disproportionately occurred in the South, among for-profit hospitals, and among hospitals that received the Medicare Dependent Hospital payment designation, one of the special Medicare payment designations for rural hospitals.

According to literature GAO reviewed and stakeholders GAO interviewed, rural hospital closures were generally preceded and caused by financial distress. In particular, rural hospitals that closed typically had negative margins that made it difficult to cover their fixed costs. According to these sources, financial distress has been exacerbated in recent years by multiple factors, including the decrease in patients seeking inpatient care and across-the-board Medicare payment reductions. In contrast, according to the literature GAO reviewed and stakeholders GAO interviewed, rural hospitals located in states that increased Medicaid eligibility and enrollment experienced fewer closures.

Research has shown that hospital closures can affect rural residents’  access to services. For example, a 2018 study found that, of the rural  hospitals that closed from 2005 through 2017, 43 percent were more than  15 miles away from the next closest hospital. In addition, a 2016 study  found that rural residents—particularly those who are elderly and low- income—were more likely to delay or forgo care after a rural hospital  closed if they had to travel longer distances to access hospital services.

In 1987, the Federal Office of Rural Health Policy (FORHP)—an office  overseen by the Department of Health and Human Services (HHS)—was  established to advise HHS on the effects that federal health care policies  and regulations have on the financial viability of small rural hospitals and  access to health care in rural areas, among other things. Both FORHP  and another agency within HHS, the Centers for Medicare & Medicaid  Services (CMS), administer payment policies and programs that support  rural hospitals.

To better understand and respond to challenges facing rural hospitals,  you asked us to describe HHS payment policies and programs focused  on ensuring rural residents have access to necessary hospital services  and what is known about recent rural hospital closures. This report  describes  1.  How HHS supports and monitors rural hospitals’ financial viability and  rural residents’ access to hospital services; and  2.  The number and characteristics of rural hospitals that have closed in  recent years and what is known about the factors that contributed to  those closures.

To identify how HHS supports and monitors rural hospitals’ financial  viability and rural residents’ access to hospital services, we reviewed  documents and interviewed officials from HHS and HHS-funded research  centers, including the University of North Carolina’s and the University of  Iowa’s rural health research centers. HHS officials identified HHS  payment policies and programs that provide key support to rural  hospitals, and we reviewed laws, regulations, and HHS documents  related to those policies and programs.

To identify the number and characteristics of rural hospitals that closed in  recent years, we analyzed data on rural hospital closures compiled by the  North Carolina rural health research center, and hospital-level data from  CMS. We also used these data to analyze and compare the  characteristics of all rural hospitals, as of 2013, and rural hospitals that  closed during the 5-year period from calendar years 2013 through 2017— the most recent years with complete data. To assess the reliability of  these data, we reviewed relevant documentation, interviewed knowledgeable officials from FORHP and the North Carolina rural health  research center, and performed electronic data tests to check for missing  data and consistency with other published data. We determined the data  were reliable for the purposes of our report. To identify additional  information on the characteristics of the rural hospitals that closed and  what is known about the factors that have contributed to those closures,  we conducted a literature review. We identified literature through  searching several bibliographic databases, including EconLit, MEDLINE,  Scopus, and Social SciSearch. We identified additional literature through,  for example, citations included in the literature we reviewed. We focused  our review on literature published between 2013 and 2018, but also  included some earlier literature for additional contextual information.  Additionally, our literature review included research based on analysis of  primary data sources, systematically summarized interviews, and case  studies. In total, we identified and reviewed 17 relevant publications that  met our standard for methodological rigor. We reviewed the degree of  rigor across these studies and interpreted their findings based on this  review. We also identified 17 additional publications that discussed  contextual information related to rural hospitals that closed. For additional  viewpoints on the characteristics of the rural hospitals that closed and the  factors that contributed to those closures, we interviewed several  stakeholders and experts: officials from FORHP and CMS and  representatives from the American Hospital Association, the National  Advisory Committee on Rural Health & Human Services, the National  Rural Health Association, and the University of North Carolina’s and  University of Iowa’s rural health research centers.

We conducted this performance audit from December 2017 to August  2018 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.

In 2017, about 2,250 general acute care hospitals in the United States  were located in areas that met FORHP’s definition of rural; these rural  hospitals represented approximately 48 percent of hospitals nationwide  and 16 percent of inpatient beds. These hospitals were spread across the  84 percent of the United States land area that FORHP classified as rural,  and served the 18 percent of the United States population that lived in  these areas.

While there are significant differences across rural areas and populations,  as a whole they differ from their urban counterparts in several ways. For  example, rural areas have the following characteristics:

Higher percentage of elderly residents. In 2014, 18 percent of the  population was aged 65 or older in rural counties, compared with 14  percent in urban counties.

Higher percentage of residents with limitations in activities  caused by chronic conditions. In 2010-2011, 18 percent of adults in  rural counties had limitations in activities caused by chronic health  conditions, compared with 13 percent in large, central urban  counties.

Lower median household income. In 2014, the median household  income in rural counties was approximately $44,000, compared to  $58,000 in urban counties.

Rural areas have also experienced several changes in recent years that  have exacerbated these differences. For example, according to research  by the United States Department of Agriculture, rural areas have  experienced the following changes:

Decreasing population. From 2010 through 2015, the population in  rural areas declined, on average, by 0.07 percent per year, while the  population in urban areas increased, on average, by 0.9 percent per  year.

Slow employment growth. From 2010 through 2015, rural  employment grew at 0.8 percent per year, less than half that of urban  areas (1.9 percent per year).

Federal Response to Rural Hospital Closures in the 1980s

Rural hospital closures are not a recent phenomenon. For example, we  previously reported that between 1985 and 1988, 140 rural hospitals  closed—approximately 5 percent of the rural hospitals in 1985. The  large number of closures in the 1980s was preceded by a change in how  Medicare paid hospitals. Specifically, in 1983, Medicare’s inpatient  prospective payment system was created, whereby predetermined rates  were set for each Medicare hospital discharge. The intent was to control  Medicare costs by giving hospitals financial incentives to deliver services  more efficiently and reduce unnecessary use of inpatient services by  paying a hospital a predetermined amount. However, one consequence  of the new payment system was that some small, rural hospitals  experienced large Medicare losses and increased financial distress.

Partially in response to the number of rural hospital closures, FORHP was  established in 1987 to, among other things, advise the Secretary of HHS on the effects of current and proposed  policies on the financial viability of small rural hospitals and on access  to and quality of health care in rural areas; establish and maintain a clearinghouse for information on rural health  coordinate rural health activities within HHS; and administer grants and other instruments to fund activities to improve  health care in rural areas.

HHS Administers Multiple Payment Policies and Programs That Support Rural Hospitals and Funds Research Centers to Monitor Closures and Access

HHS Administers Payment Polices and Programs That Provide Financial Support to Rural Hospitals, Including Medicare Rural Hospital Payment Designations

HHS officials identified several rural-specific HHS payment policies and  programs as providing key financial support to rural hospitals, and in turn,  rural residents’ access to hospital services. These key HHS payment  policies and programs may be placed into three categories: (1) Medicare  rural hospital payment designations; (2) rural grants, cooperative  agreements, and contracts, and (3) new approaches in rural health care  delivery and payment (see table 1).

Medicare rural hospital payment designations. CMS administers  five rural hospital payment designations, in which rural or isolated  hospitals that meet specified eligibility criteria receive higher  reimbursement for hospital services than they otherwise would have  received under Medicare’s standard payment methodology. A rural  hospital may qualify as a Critical Access Hospital, Sole Community  Hospital, or Medicare Dependent Hospital—each of which has  different eligibility criteria and payment methodologies. With the  exception of Critical Access Hospitals, rural hospitals may also qualify  as Low Volume Hospitals and Rural Referral Centers, in which eligible  hospitals receive additional payments or exemptions. The largest of  the five designations is the Critical Access Hospital program, which  represented 56 percent of rural hospitals in 2017 and pays eligible  small, rural hospitals based on their reported costs (instead of the  standard rates under the inpatient prospective payment system). (See  app. I, table 2, for a description of each of the five Medicare rural  hospital payment designations.) CMS was unable to provide  estimates of the additional Medicare payments rural hospitals  received from each designation in 2017. According to CMS officials,  CMS generally does not model the amount of additional Medicare  payments resulting from rural hospital payment designations, except  in years when there is a related payment policy change going through  rulemaking.

Rural grants, cooperative agreements, and contracts. FORHP  administers multiple grant programs, cooperative agreements, and  contracts that provide funding and technical assistance to rural  hospitals. The largest of these is the Medicare Rural Hospital  Flexibility grant program, in which FORHP provides funds to states to  support Critical Access Hospitals to stabilize their finances, foster  innovative models of care, and support other improvement activities.  In 2017, 45 states received $25 million in Flex grants. FORHP officials  noted that they can provide information to help states determine how  to best target Flex grant funds, as there is not enough funding to  financially assist all Critical Access Hospitals that are at risk of  closing. (See app. I, table 3, for a description of the rural grants, and  cooperative agreements and contracts identified by HHS officials.)

New approaches in rural health care delivery and payment.

CMS’s Center for Medicare & Medicaid Innovation (Innovation Center)  tests new ways to deliver and pay for health care—including some  focused on rural areas—with the goal of reducing spending and  preserving or enhancing the quality of care for beneficiaries enrolled  in Medicare, Medicaid, and the Children’s Health Insurance  Program. As of June 2018, the largest of these rural models and  demonstrations was Medicare’s Accountable Care Organization  Investment Model. Groups of providers in rural and underserved  areas participating in this model, potentially including small hospitals,  agree to be held accountable for the cost and quality of care to their  Medicare patients. The model tests providing pre-paid shared savings  as an incentive for providers in rural and underserved areas to form  Accountable Care Organizations and for these organizations to  transition to arrangements with greater accountability for financial  performance. For fiscal years 2012 through 2018, $96 million had  been obligated to organizations participating in the model. Forty-five  Accountable Care Organizations were participating in this model as of  2018. (See app. I, table 4, for a description of the new approaches  in rural health care delivery and payment identified by HHS officials.)

In addition to the HHS payment policies and programs specifically  targeting rural areas, HHS officials also identified broader payment  policies and programs that they stated can provide key support to rural  hospitals and rural residents’ access to hospital services. These HHS  payment policies and programs may be placed in four categories:

Medicare and Medicaid base payments. These consist of the  standard payments for hospitals services.

Medicare and Medicaid uncompensated care payments. Both  Medicare and Medicaid provide multiple types of additional payments  to support hospitals that incur costs for services provided to uninsured  and other low-income individuals for which the hospitals are not fully  compensated. Medicare also provides bad debt payments to hospitals to reimburse them for a portion of Medicare’s beneficiaries’ unpaid  deductibles and coinsurance, as long as the hospital makes a  reasonable effort to collect the unpaid amounts.

Other targeted HHS payment policies and programs. HHS  administers other targeted payment policies and programs that  support specific types of providers and areas, including, but not  limited to, rural hospitals and areas. In particular, the Health  Resources & Services Administration, an HHS agency, administers a  drug discount program targeted at certain hospitals and other safety  net providers. In addition, CMS administers bonus payments for  certain physician services provided to Medicare beneficiaries in areas  with a shortage of health professionals.

State Innovation Models Initiative. The Center for Medicare &  Medicaid Innovation’s State Innovation Models aim to achieve better  quality of care, lower costs, and improve health for the population of  the participating states or territory. Some states’ plans include testing  new delivery and payment models specifically targeting rural areas.

HHS Funds Research Centers That Monitor Rural Hospital Closures and Study Access

HHS monitors rural hospitals’ financial viability and rural residents’ access  to hospital services, primarily by funding rural health research centers that  track rural hospital closures and study rural residents’ access to hospital  services.

To monitor rural hospitals’ financial viability, HHS funds and conducts  several activities:

Tracking rural hospital closures and monitoring profitability. The  North Carolina rural health research center, a FORHP-funded rural  health research center, tracks rural hospital closures and monitors  rural hospitals’ profitability and other financial indicators. North  Carolina’s researchers identify rural hospital closures through a multi- party agreement with FORHP, the American Hospital Association, and  the National Rural Health Association, each of which alerts the  research center once one learns about a closure. Research center  staff then confirm the closure and ascertain whether the hospital  converted to another facility type by searching the hospital website  and calling a community leader, such as the mayor. The North  Carolina rural health research center publishes a list of rural hospital  closures since 2010 on its website. It also publishes reports on rural  hospitals’ profitability, including the extent to which profitability varies  by rural hospitals’ characteristics, and how rural hospitals’ profitability  compares to the profitability of their urban counterparts.

Monitoring Critical Access Hospitals’ financial indicators. The  North Carolina rural health research center, through its role as part of  the Flex Monitoring Team, develops and monitors various financial  indicators for Critical Access Hospitals. Using the hospitals’  Medicare cost reports, the research center currently monitors 22  financial indicators under 6 domains—profitability, liquidity, capital  structure, revenue, cost, and utilization. These financial indicator data  are available to every Critical Access Hospital through an online tool  that also helps those hospitals compare their financial performance to  peer hospitals. The Flex Monitoring Team also publishes state-level  summary data on Critical Access Hospitals’ finances that are available  on its website.

HHS also reviews and estimates the financial effect of policy changes on  rural hospitals. In particular, FORHP officials review proposed and final  rules for Medicare, Medicaid, and the Affordable Care Act’s health  insurance exchanges to identify concerns from a rural health perspective.  Drawing on the research it funds, FORHP officials may suggest policy  modifications to CMS, such as exempting certain Medicare rural hospital  designations from a proposed policy change. In addition to FORHP  officials’ review, as required by statute, CMS conducts regulatory impact  assessments that estimate the effect of policy changes on payments to  hospitals, including small rural hospitals, and publishes key results as part  of proposed and final rules. For example, as part of the fiscal year 2018  final rule on Medicare payment for hospital inpatient services, CMS  estimated that the expiration of the Medicare Dependent Hospital  designation would have decreased the payments to rural hospitals with  that designation by 0.9 percent, or approximately $119 million.  Subsequent to the final rule, the Medicare Dependent Hospital and Low  Volume Hospital designations were both extended.

To monitor rural residents’ access to hospital services, HHS relies on  research conducted by the FORHP-funded research centers. Examples  of recent research on rural residents’ access to hospital services  conducted by FORHP-funded research centers include the following:

Research on rural residents’ access to hospitals. In 2018 the  North Carolina rural health research center published an analysis of  populations in rural counties without access to an acute care hospital  or other types of primary care facilities. North Carolina’s researchers  estimated that about 4.4 million rural residents currently live in a  county without an acute care hospital.

Research on access to specific hospital services. The Minnesota  rural health research center conducted a body of research on  declining access to obstetric services in rural counties. These  researchers found that between 2004 and 2014, the percent of rural  counties without hospital obstetric services increased from 45 to 54  percent, through a combination of hospital and obstetric-unit  closures.

Research on options for ensuring rural residents’ access after a  hospital closure. The Iowa rural health research center published a  summary of currently available options for ensuring rural residents’  access to hospital services after a hospital closure, and additional  policy options under consideration. The National Advisory  Committee on Rural Health and Human Services, a 21-member  citizens’ panel of nationally recognized rural health experts that  advises HHS, also examined this topic, with a focus on alternative  models to preserve rural residents’ access to emergency care in light  of the recent surge in rural hospital closures. The committee noted  that payments and grants to support rural hospitals were largely  effective and stabilized rural hospital financial operations until 2013,  when a new wave of rural hospital closures began. The report  included recommendations regarding the design of alternative  models, including that HHS seek public comments on the use of a   combination of geographic distance and demographic or social  determinants of health when setting eligibility criteria.

To supplement the monitoring by FORHP-funded research centers,  FORHP officials also track recent rural developments and reports from  rural health stakeholders. FORHP officials said this monitoring adds a  qualitative component to the quantitative research conducted by research  centers. In particular, these activities often provide the first notice of a  rural hospital closure or pending closure, and also help track changes to  the status of former hospitals over time.

HHS Uses the Results of Its Monitoring Activities to Inform Future Research and Grant Awards, and Disseminates This Information

HHS uses the results of its monitoring activities on rural hospitals’  financial viability and rural residents’ access to inform related research,  primarily conducted by HHS-funded research centers, and to determine  future areas of research. For example, the North Carolina rural health  research center has used the list of rural hospital closures it compiles and  its monitoring of profitability to conduct research on predictors of rural  hospitals’ financial distress. In addition, FORHP officials stated that,  based on this monitoring, they have added topics to research centers’  agendas for subsequent years to gather more information on regulatory  changes identified in its review of policy changes. Each year, specific  research projects for the rural health research center are selected jointly  by the center directors and FORHP. Topics are selected to have a timely  impact on policy debates and decisions at both federal and state levels.  Examples of added topics include North Carolina’s research on the  financial importance of the Sole Community Hospital and Low Volume  Hospital designations and Iowa’s research on the engagement of rural  providers in Accountable Care Organizations.

HHS has also used the results of its monitoring activities to update the  types of services offered by certain grants and create new cooperative  agreements for technical assistance. Specifically, for fiscal year 2016,  FORHP officials updated the list of activities that Rural Health Network  Development Planning grantees can spend funds on to include  implementing innovative solutions to alleviate the loss of local services  and enhance access to care in communities that have or are at risk of  losing their local hospital. According to FORHP officials, the addition of  this activity to the scope of the grant led to 11 of the 47 applicants from  fiscal years 2016 and 2017 to come from rural communities with a recent  rural hospital closure or perceived risk of closure. As another example, in  response to increased funding, in 2018 FORHP announced a new  cooperative agreement to provide targeted in-depth assistance to  vulnerable rural hospitals within communities struggling to maintain health  care services. The awardee of the Vulnerable Rural Hospitals Assistance  Program must work with vulnerable hospitals and their communities on  ways to ensure hospitals and communities can keep needed care locally,  whether it is with a more limited set of services provided by the hospital,  or by exploring other mechanisms for meeting community health care  needs.

FORHP disseminates the results of this research and successful rural  health grants and other projects by funding cooperative agreements to  maintain clearinghouses of information about rural health issues. These  clearinghouses were originally designed to efficiently disseminate  research findings from rural health research centers to the public and to  help rural communities identify opportunities and information to provide  better healthcare to their residents. According to one of these  clearinghouses, since then, the focus has grown to developing evidence- based resources on rural health to share what works in rural  communities, including toolkits and case studies.

Recent Increases in Rural Hospital Closures Have Disproportionately Occurred in the South, With Multiple Factors Likely Contributing to These Closures

From 2013 through 2017, More than Twice as Many Rural Hospitals Closed than in the Prior 5 Years

Our analysis of data from the North Carolina rural health research center  and CMS shows that, from 2013 through 2017, 64 of the approximately  2400 rural hospitals in the United States closed. These 64 rural hospital  closures represented the following:

More than twice the number of rural hospitals that closed during  the prior 5-year period. From 2008 through 2012, 31 rural hospitals  closed (see fig. 1).

More than the share of urban hospitals that closed. The 64 rural  hospital closures from 2013 through 2017—approximately 3 percent  of all rural hospitals in 2013—exceeded the 49 urban hospital  closures during the same time period—approximately 2 percent of all  urban hospitals in 2013.

More than the number of rural hospitals that opened. The 42 rural  hospitals closed from 2014 through 2016 exceeded the 3 rural  hospitals opened during the same time period.

Approximately half of the rural hospitals that closed from 2013 through  2017—47 percent—ceased to provide any type of services. The  remaining hospitals that closed during this period converted to other  facility types, providing more limited or different services, such as urgent  care, emergency care, outpatient care, or primary care.

Rural Hospitals with Certain Characteristics— Including Those Located in the South—Accounted for a Disproportionate Share of Closures from 2013 through 2017

Our analysis of data from the North Carolina rural health research center  and CMS shows that rural hospitals with certain characteristics—including  those located in the South—accounted for a disproportionate share of the  64 closures that occurred from 2013 through 2017.

Geography. Rural hospitals located in the South represented 38  percent of the rural hospitals in 2013, but accounted for 77 percent of  the rural hospital closures from 2013 through 2017 (see fig. 2). Texas,  one southern state, represented 7 percent of the rural hospitals in  2013, but accounted for 22 percent of the rural hospitals closures from  2013 through 2017.

Medicare rural hospital payment designations. Medicare  Dependent Hospitals – one of three Medicare rural hospital payment  designations in which hospitals were eligible to receive a payment  rate other than standard Medicare inpatient payment rate – were  disproportionately represented among hospital closures. Specifically,  Medicare Dependent Hospitals represented 9 percent of the rural  hospitals in 2013, but accounted for 25 percent of the rural hospital  closures from 2013 through 2017. Rural hospitals that did not receive  one of these three Medicare rural hospital payment designations also  represented a disproportionate share of the closures (see fig. 3). In  addition, hospitals designated as Low Volume Hospitals had a  disproportionate share of the rural hospital closures.

Ownership. For-profit rural hospitals represented 11 percent of the  rural hospitals in 2013, but accounted for 36 percent of the rural  hospital closures from 2013 through 2017 (see fig. 4). According to  literature we reviewed, hospitals with for-profit status had a higher  probability of financial distress and were more likely to close. For  example, a 2017 study found that for-profit hospitals were more than  twice as likely to experience financial distress relative to government- owned and non-profit hospitals from 2000 through 2013.

Bed size. Rural hospitals with between 26 and 49 inpatient beds  represented 11 percent of the rural hospitals in 2013, but accounted  for 23 percent of the rural hospital closures from 2013 through 2017.  Critical Access Hospitals have 25 acute inpatient beds or less and  make up a majority of the rural hospitals, but were less likely than  other rural hospitals to close. FORHP officials identified the Critical  Access Hospital payment designation – in which Medicare pays  designated hospitals based on their costs – paired with the related  Medicare Rural Hospital Flexibility grant program as the most effective  HHS payment policy and program to support rural hospitals’ financial  viability and rural residents’ access to hospital services.

Fewer Patients Seeking Inpatient Care and Reductions in Medicare Payments Have Likely Contributed to Rural Hospital Closures

According to literature we reviewed and stakeholders we interviewed,  rural hospital closures were generally preceded and caused by financial  distress. In particular, rural hospitals that closed typically had negative  margins which made it difficult to cover their fixed costs. For example,  one 2016 study found that rural hospitals that closed from 2010 through  2014 had a median operating margin of -7.41 percent in 2009. In contrast,  rural hospitals that remained open during the same time period had a  median operating margin of 2.00 percent in 2009. In addition, there is  evidence that for-profit hospitals have been more sensitive to changes in  profitability and more likely to experience financial distress, which could  explain the disproportionate number of closures among rural hospitals  with for-profit ownership type.

The literature we reviewed and stakeholders we interviewed identified  multiple factors that likely contributed to increased financial distress and  closures among rural hospitals. One such factor was a decrease in  patients seeking inpatient care at rural hospitals due to the following:  Increased competition for the small volume of rural residents.  Rural residents may choose to obtain services from other health care  providers separate from the local rural hospital, for example from an  increasing number of federally qualified health centers or newer  hospital systems outside of the area. The competition for the small  volume of rural residents between rural hospitals and other health  care providers potentially increased due to the shift to paying for value  instead of volume, and technology changes. This increased  competition for a small volume of rural residents could explain  disproportionate closures among hospitals receiving the Low Volume  Hospital Medicare payment designation, hospitals that by definition  have a low Medicare volume and that research has found have lower  margins than other rural hospitals. In addition, representatives from  the American Hospital Association told us that technological advances  have allowed more services to be provided in outpatient settings.  For example, changes in health care technology have expanded the  provision of outpatient surgical procedures.

Declining rural population. The years 2010 through 2016 marked  the first recorded period of rural population decline. According to  literature we reviewed and stakeholders we interviewed, the recent  population decline in rural areas was likely associated with the recent  decline in rural residents seeking inpatient services.

Another factor highlighted by literature we reviewed and stakeholders we  interviewed as contributing to rural hospitals’ increased financial distress  was across-the-board Medicare payment reductions. Rural hospitals are  sensitive to changes to Medicare payments because, on average,  Medicare accounted for approximately 46 percent of their gross patient  revenues in 2016. A 2016 study found that Medicare Dependent  Hospitals’ operating margins decreased each year from 2012 through  2014, which could explain the disproportionate number of closures among  the Medicare Dependent Hospital payment designation. The literature  we reviewed and stakeholders we interviewed highlighted the recent  Medicare payments cuts as contributing to rural hospital closures, which  included the following:

Reductions in nearly all Medicare reimbursements. Under  sequestration – the cancellation of budgetary resources under  presidential order implemented pursuant to the Balanced Budget and  Emergency Deficit Control Act of 1985, as amended – each fiscal year  since 2013, nearly all Medicare’s budget authority is subject to a  reduction not exceeding 2 percent, which is implemented through  reductions in payment amounts. According to stakeholders we  interviewed, these payment reductions have contributed to negative  margins for rural hospitals.

Reductions in Medicare bad debt payments. Under the Middle  Class Tax Relief and Job Creation Act of 2012, Medicare bad debt  reimbursements for hospitals were reduced beginning in fiscal year  2013. According to stakeholders, Medicare bad debt cuts have been  one of the most important factors contributing to the recent increase in  rural hospital closures.

The literature we reviewed and stakeholders we interviewed also  identified factors that likely strengthened the financial viability of rural  hospitals. Chief among these factors was the increased Medicaid  eligibility and enrollment under the Patient Protection and Affordable Care  Act. A 2018 study found that Medicaid expansion was associated with  improved hospital financial performance and substantially lower likelihood  of closure, especially in rural markets and counties with large numbers of  uninsured adults before Medicaid expansion. Another 2017 study found  that from 2008-2009 and 2014-2015 the drop in uninsured rates  corresponded with states’ decisions to expand Medicaid on or before  January 1, 2014. The increase in Medicaid coverage and decline in  uninsured were both largest in the small towns and rural areas of those  expansion states. Additionally, our analysis of data from the North  Carolina rural health research center and CMS shows that from 2013  through 2017, rural hospitals in states that had expanded Medicaid as of  April 2018 were less likely to close compared with rural hospitals in states  that had not expanded Medicaid (see fig. 5).

We provided a draft of this report to HHS for comment. The Department  provided technical comments, which we incorporated as appropriate.

As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies of this report to the  appropriate congressional committees, the Secretary of Health and  Human Services, the Administrator of Health Resources & Services  Administration, the Administrator of CMS, and other interested parties. In  addition, the report is available at no charge on the GAO website at  http://www.gao.gov.

If you or your staffs have any questions about this report, please contact  me at (202) 512-7114 or cosgrovej@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix II.

Appendix I: Rural-Specific Payment Policies and Programs That Provide Key Support to Rural Hospitals

Officials from the Department of Health and Human Services (HHS)  identified several rural-specific HHS payment policies and programs as  providing key support to rural hospitals, and in turn, rural residents’  access to hospital services. These key HHS payment policies and  programs may be placed into three categories:

Medicare rural hospital payment designations (table 2);

Rural grants, cooperative agreements and contracts (table 3); and

New approaches in rural health care delivery and payment (table 4).

Appendix II: GAO Contact and Staff Acknowledgments

In addition to the contact named above, Greg Giusto (Assistant Director),  Alison Binkowski (Analyst-in-Charge), George Bogart, Zhi Boon, Leia  Dickerson, Krister Friday, Mike Hoffman, Peter Mann-King, Beth  Morrison, Vikki Porter, Merrile Sing, and Chris Woika made key  contributions to this report.

Has there been an increase in U.S. rural hospital closures?

Yes. From 2013 to 2017, 64 rural hospitals closed, more than twice as many as during the previous 5-year period.

Rural hospital closures disproportionately occurred in the South, among for-profit hospitals, and among Medicare Dependent Hospitals—small rural hospitals with Medicare beneficiaries accounting for a certain percentage of their business.

Financial distress. Multiple factors have exacerbated this, including a decrease in patients seeking inpatient care and across-the-board Medicare payment reductions.


Public School Choice: Limited Options Available for Many American Indian and Alaska Native Students

Education refers to school choice as the opportunity for students and their families to create high-quality, personalized paths for learning that best meet the students' needs. For Indian students, school choice can be a means of accessing instructional programs that reflect and preserve their languages, cultures, and histories. For many years, studies have shown that Indian students have struggled academically and the nation's K-12 schools have not consistently provided Indian students with high-quality and culturally-relevant educational opportunities.

GAO was asked to review K-12 school choice options for Indian students. This report examines the public school options located in areas with large Indian student populations. GAO used Education's Common Core of Data for school year 2015-16 (most recent available) to analyze public school choice in (1) school districts in which Indian students accounted for 25 percent or more of all students (i.e., high percentages of Indian students) and (2) the 100 school districts with the largest number of Indian students. GAO also interviewed federal officials, relevant stakeholder groups, and tribal leaders to better understand school choice options for Indian students.

Few areas provide American Indian and Alaska Native students (Indian students) school choice options other than traditional public schools. According to GAO's analysis of 2015-16 Department of Education (Education) data, most of the school districts with Indian student enrollment of at least 25 percent had only traditional public schools (378 of 451 districts, or 84 percent). The remaining 73 districts had at least one choice, such as a Bureau of Indian Education, charter, magnet, or career and technical education school (see figure). Most of these 451 districts were in rural areas near tribal lands. Rural districts may offer few school choice options because, for example, they do not have enough students to justify additional schools or they may face difficulties recruiting and retaining teachers, among other challenges.

Some of the 100 school districts with the largest number of Indian students were located in large urban areas, such as New York City, and the majority (62) offered at least one option other than a traditional public school, according to GAO's analysis. The most common option was a charter school. However, because Indian students often account for a small percentage of all students in these districts, Indian education experts GAO interviewed said that the schools are less likely to have curricula that reflect Indian students' cultural identity or provide instruction on Native languages—things that tribes and experts consider crucial to strengthening, rebuilding, and sustaining Indian cultures and communities. Also, even when Indian students had more options, no consistent enrollment patterns were evident. Whether Indian students enrolled in different types of schools could be a function, in part, of differences in state school choice laws and the extent to which these schools offered curricula that reflect Indian languages, cultures, or histories, according to Indian education experts.

GAO is not making recommendations in this report.

For many years, studies have shown that American Indian and Alaska  Native students (collectively referred to as Indian students) have  struggled academically, and the nation’s K-12 schools have not  consistently provided these students with high-quality, culturally-relevant  educational opportunities to encourage their success. As a result, lower  academic outcomes have consequences for Indian students’ future  educational and economic opportunities, and also can affect a tribe’s  ability to build a competitive tribal economy. The Department of Education  (Education) generally refers to school choice as the opportunity for  students and their families to create high-quality, personalized paths for  learning that best meet the student’s needs through public, private, or  home-based educational programs or courses. Such opportunities can  also be a means for Indian students to access instructional programs that  reflect and preserve Indian languages, cultures, and histories.

You asked us to review K-12 school choice options for Indian students.  This report examines the public school choice options located in areas  with large populations of Indian students.

We focused our analyses on two subsets of public school districts with  large Indian student populations that collectively represented nearly  260,000 students, or more than half of all Indian students in K-12 public  schools, according to Education’s Common Core of Data (CCD). The  subsets are:  1.  Public school districts in which Indian students accounted for 25  percent or more of all students in the district. We refer to school  districts that met this threshold as having a “high percentage” of  Indian students. It is consistent with Education’s definition of a “high- density” school for Indian students which the agency uses in its  National Indian Education Study.  2.  The top 100 public school districts by number of Indian students  enrolled. We refer to school districts that met this threshold as having  the “largest number” of Indian students. This threshold allowed us to  examine school choice in areas where many Indian students live, but  may not represent a high percentage of all students (e.g., some large  cities). Education has similarly reported CCD data for the 100 public  school districts with the largest number of students enrolled.

To conduct our work, we analyzed Education’s national data on K-12  public schools from the CCD for school year 2015-16 (the most recent  available). We analyzed data on four types of K-12 public schools: (1)  traditional, (2) charter, (3) magnet, and (4) career and technical education  (CTE). We added data from Bureau of Indian Education (BIE) schools to  our analysis because these schools can provide an additional, unique  choice for Indian students and their families in some areas. (See text  box.) We also examined the options that were available based on a  school district’s location in an urban or rural area, and mapped the  specific locations of schools within those districts. We determined these  data were sufficiently reliable for the purposes of this report by reviewing  documentation, conducting electronic testing, and interviewing Education  officials.

Traditional school: A public elementary or secondary school providing regular  instruction and education services.   Charter school: A public elementary or secondary school providing education to  eligible students under a specific charter granted by the state legislature or other  appropriate authority, and it is designated by such authority to be a charter school.  Magnet school: A public elementary or secondary school designed to attract students  of different racial or ethnic backgrounds for the purpose of reducing, preventing, or  eliminating racial isolation; and/or to provide an academic or social focus on a particular  theme, such as science and math, performing arts, gifted and talented, or foreign  language.  Career and technical education (CTE) school: A public elementary or secondary  school that focuses on providing formal preparation for semiskilled, skilled, technical, or  professional occupations for high school-age students who have opted to develop or  expand their employment opportunities, often in lieu of preparing for college entry.  Bureau of Indian Education (BIE) school: BIE oversees 185 elementary and  secondary schools, which are designed to provide education to members of federally- recognized tribes who reside on or near federal Indian reservations. Unlike public  schools, BIE schools receive almost all of their funding from federal sources.

We did not consider private schools in our analysis. Education collects  biennial data on private schools through its Private School Universe  Survey, which we determined was a reliable dataset for describing  aggregate data on the total number of Indian students that attended  private schools in school year 2015-16. However, we determined the data  were not sufficiently reliable to map the specific locations of private  schools.

To better understand the public school options available for Indian  students, we interviewed or received input from a number of experts on  Indian education. For example, we spoke with federal officials from  Education, BIE, and the White House Initiative on American Indian and  Alaska Native Education; received input from representatives from  national organizations that advocate on behalf of Indian students and  tribes, such as the National Indian Education Association, the National  Advisory Council on Indian Education, and the National Congress of  American Indians; and met with academic subject matter experts on  Indian education. In addition to these experts, we heard from some tribal  leaders about their perspectives on Indian education, school choice, and  academic achievement. Appendix I contains detailed information about  the scope and methodology for this report.

We conducted this performance audit from March 2018 to January 2019  in accordance with generally accepted government auditing standards.

Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

Public school choices typically include charter schools and magnet  schools, as well as local-level options to transfer or choose among  traditional public schools. CTE schools may provide an additional option  for students seeking to develop or expand their employment  opportunities, often in lieu of preparing for post-secondary education.  Education, as well as national organizations that advocate on behalf of  tribes, has noted that the flexibility associated with these options can also  allow for increased tribal control and oversight of education for Indian  students, and create opportunities to integrate knowledge, language,  culture, and other aspects of Indian identity into the classroom, regardless  of the type of school.

Charter schools accounted for 6 percent of all public schools in school  year 2015-16 (the school year with the most recent enrollment data  available). As of that year, 43 states and the District of Columbia had  enacted legislation to permit public charter schools, according to  Education. The availability of magnet schools also differs across states  and districts given that, in some cases, these schools are intended to  eliminate, reduce, or prevent racial isolation in areas with substantial  numbers of minority group students, according to Education’s Magnet  Schools Assistance Program. In school year 2015-16, magnet schools  accounted for 3 percent of all public schools. CTE schools are less  common, representing 1 percent of all public schools in 2015-16.

Indian Student Enrollment in K-12 Schools

Approximately 505,000 Indian students attended K-12 public schools in  school year 2015-16, representing 1 percent of all public school students,  according to CCD data. The majority attended traditional public schools  (see fig. 1).

In addition to the half a million Indian students attending public schools,  approximately 45,000 attended BIE schools in school year 2015-16,  according to BIE enrollment data. BIE administers 185 schools on or near  Indian reservations in 23 states. BIE schools are predominantly in rural  communities, serve mostly low-income students, and receive almost all of  their funding from federal sources. Students attending BIE schools generally must be members of federally recognized tribes, or  descendants of members of such tribes, and reside on or near federal  reservations.

Indian students attend public schools in settings ranging from large urban  areas to remote rural areas. According to CCD data, in school year 2015- 16, 58 percent of Indian students attended public schools in rural areas,  while 42 percent attended public schools in urban areas (see fig. 2).

Every 4 years, Education conducts the National Indian Education Study to  provide in-depth information on the educational experiences and  academic performance of Indian students in 4th and 8th grade. The study  differentiates between public schools in which 25 percent or more of the  students are Indian, public schools in which less than 25 percent of the  students are Indian, and BIE schools. Data from the 2015 iteration, most  recent available, showed that Indian students attending BIE schools  consistently had the lowest math and reading scores in 8th grade, while  Indian students attending public schools with lower percentages of Indian  students consistently performed the best in these subjects (see fig. 3).

Few School Districts with Large American Indian and Alaska Native Student Populations Offered Public School Choice Options

Traditional Public Schools Were the Only Options in Most School Districts with High Percentages of American Indian and Alaska Native Students

Few areas with high percentages of Indian students had options other  than traditional public schools, according to our analysis of Education  data for school year 2015-16. Of the 451 school districts with high  percentages of Indian students in our analysis, 84 percent (378 districts)  had only traditional public schools. The remaining 16 percent (73 districts)  had at least one BIE school, charter school, magnet school, or CTE  school. The most common option was a BIE school (see fig. 4). Among  districts that had only traditional public schools, about three-quarters of  them had more than one school. The presence of a school choice option  or more than one traditional school in a given location does not mean that  a given school is necessarily available to all Indian students in the area.

This may be because of school-level factors such as enrollment caps,  eligibility requirements, or grade levels offered, and environmental  factors, such as limited transportation options.

Indian students attend school in both urban and rural areas, though  nearly all school districts with high percentages of Indian students were  located in rural areas—99 percent compared to 1 percent located in  urban areas. In addition, as shown in figure 5, school districts with high  percentages of Indian students were generally located near tribal lands,  and half of the 451 districts were located in Oklahoma. In these districts,  there were a total of 119 BIE schools, 28 charter schools, 6 magnet  schools, and 24 CTE schools. Most of the districts that had at least one  charter, magnet, or CTE school were located in Arizona and New Mexico.  See appendix II for detailed maps of the options available in school  districts with high percentages of Indian students in select regions of the  country.

There are several reasons why there may be few public school options in  districts with high percentages of Indian students. As previously noted,  nearly all of these districts are in rural areas. Experts said there are often  not enough students in rural areas to justify adding schools beyond the  traditional public schools or BIE schools that already exist, and rural  school districts can face challenges recruiting and retaining qualified  teachers. We have also reported on how limited broadband internet  access and poor road conditions on tribal lands can affect educational  opportunities for Indian students in rural areas regardless of the type of  school they attend.

Districts with the Largest Number of American Indian and Alaska Native Students Had More Public School Options

As previously noted, we also analyzed Education data from the 100  school districts with the largest number of Indian students. Some of these  districts were located in large urban areas and a majority had at least one  other option in addition to traditional public schools (see fig. 6).

Of these 100 districts, 62 offered at least one option other than a  traditional public school, with the most common option being charter  schools (see fig. 7).

With regard to the individual schools within the 100 districts with the  largest number of Indian students, we found that 75 percent of the  schools were concentrated in just 15 school districts. These 15 districts  had the largest overall student enrollments and were in urban areas such  as New York City, Los Angeles, and Albuquerque. As shown in figure 8,  the majority of charter, magnet, and CTE schools were located in these  15 largest districts. In contrast, nearly all BIE schools were located in the  85 other districts. As noted previously, BIE schools are predominantly in  rural areas, and serve students who reside on or near Indian  reservations.

Though school districts in urban areas offered more school choice options  than school districts in non-urban areas, experts said Indian students in  urban areas sometimes feel isolated in their schools and communities.  They noted that Indian students often account for a small percentage of  all students in large urban districts and their schools are less likely to  have curricula that reflect their cultural identity or provide instruction on  Native languages. In the 15 largest of the 100 districts in our analysis,  Indian students represented less than 5 percent of all students in each  district and in some cases represented as few as 0.2 percent. In the 46  urban school districts in the 100 districts with the largest number of Indian  students, just 3 districts had an Indian student enrollment greater than 25  percent.

American Indian and Alaska Native Student Enrollment in Public School Options Varied by School District

Even when Indian students had more school choice options, there was no  consistent enrollment pattern across districts with large numbers of Indian  students. In about a quarter of the districts that had at least one charter  school, Indian students enrolled in charter schools in similar percentages  as non-Indian students. In the remaining districts, enrollment patterns  varied. For example, in one school district near Boise, Idaho and another  near Fairbanks, Alaska, Indian students attended charter schools at  higher percentages than their peers by 60 percentage points and 6  percentage points, respectively. Whereas, in other districts, such as one  district near Flagstaff, Arizona and another near Salt Lake City, Utah,  Indian student enrollment in charter schools was lower than their peers by  18 percentage points and 6 percentage points, respectively.

Similarly, Indian student enrollment in magnet schools varied across the  17 districts with those schools. In 10 of these districts, Indian students  attended magnet schools at lower percentages than non-Indian students.  For example, in one district near Sault Ste. Marie, Michigan and another  district near Broward County, Florida, Indian student enrollment in magnet  schools was lower than their peers by 12 percentage points and 3  percentage points, respectively. In the other 7 districts, Indian students  attended magnet schools at higher percentages than non-Indian students.  For example, in one district near Stockton, California and another near  Minneapolis, Minnesota, Indian student enrollment in magnet schools was  higher than their peers by 17 and 9 percentage points, respectively.

Whether Indian students enrolled in different types of schools could be a  function of local differences in school choice and could be influenced by  the extent to which these schools offered curricula that reflect Indian  languages, cultures, or histories. Experts with whom we spoke said that in  some areas, tribes have more control over education for Indian students,  which can increase the tribe’s ability to influence curricula and  accountability metrics to help meet Indian students’ academic and non- academic needs. Experts further noted that many districts with high  percentages of Indian students are located near tribal lands, which can  offer Indian students living there greater access to culturally-relevant  curricula and instruction in Native languages than their peers in urban  locations. In 2015, the National Indian Education Study reported that in  schools where Indian students represented at least one-quarter of the  students, a higher percentage of Indian students reported knowledge of  their heritage or reported they received instruction in Native languages  compared to peers attending schools with lower percentages of Indian  students. Several tribal leaders and experts in Indian education said that  access to culturally-relevant curricula and language instruction is crucial  to strengthening, rebuilding, and sustaining Indian cultures and  communities.

In addition, experts noted that tribes sometimes seek to operate or  oversee schools for Indian youth. For example, Oklahoma allows  federally recognized tribes to authorize charter schools. In other states  with charter school legislation, experts told us that tribes often must work  through state charter school authorizers if they wish to open charter  schools. BIE officials and Indian education experts also said that areas  with BIE schools offer opportunities for tribes to exercise more control  over education by converting the school from BIE-operated to tribally- operated. One tribal leader said the tribe was exploring this option in  order to increase the tribe’s autonomy over its students’ education.  Education has federal-level program offices that provide support to states  and school districts related to school choice generally and Indian  education specifically. Education recently finalized changes to its Charter  Schools Program that will give priority to grantees seeking funding  opportunities that would specifically serve the educational needs of Indian  students.

Finally, some urban school districts with large numbers of Indian students  have district-level offices designed to work directly with Indian students  and their families and to liaise between the school district and nearby  tribes. Access to these resources, among other things, may help Indian  students and families select a school that will best meet the student’s  academic and non-academic needs, according to Indian education  experts we interviewed.

We provided a draft of this report to the Department of Education  (Education) for review and comment. We also provided a copy to the  Department of the Interior’s Bureau of Indian Education (BIE).

Education’s comments are reproduced in appendix III. Education also  provided technical comments, which we incorporated as appropriate. In  its written comments, Education suggested that, given the eligibility  requirements to attend BIE schools, it is possible for Indian students to  have greater access to educational choice than their non-Indian peers in  some areas. This observation is consistent with the findings of our report,  which showed that in school districts with high percentages of Indian  students and school options, the most common option was a BIE school  (see fig. 4). However, 84 percent of these districts offered only traditional  public schools. Nearly all of these districts were located in rural areas  and, as we reported, have few school options.

Education expressed concern that our analysis does not appropriately  reflect the full spectrum of education choice options available to Indian  students, particularly private schools. They stated it would be helpful to  understand how we determined that Education’s Private School Universe  Survey (PSS) was not reliable for the purposes of mapping specific  locations of private schools. We clarified our rationale in appendix I.  Specifically, according to Education’s PSS survey documentation, the  PSS was based on a sample of private schools, not the universe. The  official in Education’s National Center for Education Statistics (NCES)  who is responsible for the PSS told us that the PSS sample contained  only about half of the private schools in the nation, which would not allow  for comprehensive mapping of private schools.

We further explored using the broader list of private schools from which  Education draws the PSS sample. The PSS documentation shows that  about 30 percent of this list (more than 10,000 entities) were not private  schools. We confirmed this information with the same NCES official, who  explained that entities that are not private schools are filtered out through  NCES’s survey process. Based on our review of the PSS survey  documentation and methods and our interviews with cognizant NCES  officials, we determined that it would not be possible to use PSS data to  comprehensively and accurately map the locations of these private  schools nationally or in specific areas with large Indian student  populations. However, as we indicated in the draft report on which  Education commented, the PSS contains information on a large number  of private schools and we determined that it can provide reliable data for  some variables other than the specific locations of private schools,  including the total number of students attending private schools  disaggregated by race and ethnicity. As discussed, we used the PSS for  such purposes in this report.

In its comments, Education also encouraged us to further explore specific  examples of school options that have a mission to address the unique  educational needs of Indian students. We reviewed several relevant  studies as part of our work, including some related to the sources  Education suggested. However, an in-depth review of specific examples  was outside the scope of our work.

As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the appropriate  congressional committees, the Secretary of Education, and other  interested parties. In addition, the report will be available at no charge on  the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (617) 788-0580 or nowickij@gao.gov. Contact points for our Offices   of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix IV.

Appendix I: Objectives, Scope, and Methodology

This report examines the public school choice options located in areas  with large populations of American Indian and Alaska Native students,  collectively referred to as Indian students.

To conduct this work, we analyzed the Department of Education’s  (Education) national data on K-12 public schools from the Common Core  of Data (CCD) for school year 2015-16 (the most recent available).  Education’s National Center for Education Statistics administers the CCD  survey annually to collect a range of data from all public schools and  districts in the nation, including student demographics (e.g., race or  ethnicity) and school characteristics (e.g., school type, such as a charter  or magnet school). State educational agencies supply these data for their  schools and school districts. We determined the data we analyzed were  sufficiently reliable for the purposes of this report by reviewing  documentation, conducting electronic testing, and interviewing officials  from Education’s National Center for Education Statistics.

To inform all aspects of our work, we interviewed federal officials from  Education, the Bureau of Indian Education (BIE), and the White House  Initiative on American Indian and Alaska Native Education. We  interviewed or received input from representatives from several  organizations that represent or advocate on behalf of Indian students and  tribes, such as the National Indian Education Association, the National  Advisory Council on Indian Education, the National Congress of American  Indians, and the Tribal Education Departments National Assembly. We  also heard from some tribal leaders who provided non-generalizable  perspectives on Indian education, school choice, and academic  achievement. We met with academic subject matter experts, as well as  other relevant nonfederal organizations, such as ExcelinEd, the National  Alliance for Public Charter Schools, and the U.S. Conference of Catholic  Bishops, to discuss issues related to school choice for Indian students.

Defining Areas with Large Populations of Indian Students

We focused our analyses on two subsets of public school districts with  large Indian student populations, as follows:  1.  Public school districts in which Indian students accounted for 25  percent or more of all students in the district. We refer to school  districts that met this threshold as having a “high percentage” of  Indian students. It is consistent with Education’s definition of a “high- density” school for Indian students which the agency uses in its  National Indian Education Study.  2.  The top 100 public school districts by number of Indian students  enrolled. We refer to school districts that met this threshold as having  the “largest number” of Indian students. This threshold allowed us to  examine school choice in areas where large numbers of Indian  students live, but may not represent a high percentage of all students.  Education has similarly reported CCD data for the 100 public school  districts with the largest number of students enrolled.

The CCD collects data on public school type in two ways:  1.  Schools are categorized as regular public schools, special education  schools, career and technical education schools, or alternative/other  schools based on the school’s curriculum or population served. See  table 1 for definitions for each of these categories.  2.  In addition to the above categories, schools can have additional  statuses, which are not mutually exclusive. These statuses include  magnet school, charter school, and virtual school. See table 2 for  definitions for each of these school statuses.

Because the CCD collects public school type data in two ways, we sorted  schools based on the combination of school types and statuses to  develop distinct categories for our analysis. Table 3 outlines the  combinations of CCD school type and status, along with the  corresponding category we used in our analysis. For reporting purposes,  we used the term “traditional school” in place of “regular school” to be  consistent with our prior reports on K-12 education issues that analyzed  the CCD and other Education datasets.

In addition to the school types listed above, we included BIE schools in  our analysis because they may provide a unique school option in some  areas with large populations of Indian students. Data on the location of  BIE schools were captured in the 2015-16 CCD. BIE also provided us  with enrollment data for its schools, which we reviewed to determine that  the presence of BIE schools did not affect our analysis of Indian student  enrollment in other types of schools.

We focused our analysis on (1) traditional public schools, (2) charter  schools, (3) magnet schools, (4) career and technical education schools,  and (5) BIE schools. Traditional public schools provided a baseline from  which to compare other school choices in a given school district. We  referred to the other four school types as “school choice options”  collectively. We considered a school district as having school choice  options if the district included at least two schools in total, and offered at  least two of the five school types in our analysis. We compared school  districts with school choice options to school districts that had only  traditional public schools.

In school districts with high percentages of Indian students, there were no  schools that reported having both charter and magnet school status. In  the 100 school districts with the largest number of Indian students, there  were 6 school districts that reported a total of 17 schools as having both  charter and magnet status. This did not affect our analysis of school  districts with school choice options because each of those 6 districts had  at least one additional school that had only charter status and at least one  additional school that had only magnet status in school year 2015-16.

We excluded special education schools, alternative/other schools, and  schools flagged as state-operated juvenile justice facilities from our data  analysis because those schools limited enrollment and could not be  classified as a choice. We did not consider virtual schools in our analysis  because, as defined in the CCD, these schools generally do not have a  physical facility, which limits the ability to ascribe a virtual school to a  specific location or school district. Similar limitations would apply to  studying homeschooling or non-public online educational options, which  are not captured in the CCD. We also excluded schools that were  reported closed, inactive, or not yet opened in 2015-16.

As noted previously, we focused our analyses on (1) school districts with  high percentages of Indian students and (2) the 100 school districts with  the largest number of Indian students. In school year 2015-16, there were  453 school districts with high percentages of Indian students. However, in  our analysis we found one school district with a high percentage of Indian  students that did not offer any traditional, charter, magnet, career and  technical education, or Bureau of Indian Education schools, and one  school district that offered one magnet school, but no other schools. We  excluded these two districts from our analysis because they did not offer  any choice as described above. After excluding these two districts, there  were 451 school districts with high percentages of Indian students in our  analysis. In total, and after accounting for overlap among school districts  that had both high percentages and large numbers of Indian students, our  analysis included 259,033 students—51 percent of all Indian students  attending public schools in school year 2015-16—across 504 school  districts.

We did not consider private schools in our analysis. Education collects  biennial data on private schools through its Private School Universe  Survey (PSS), which we determined was a reliable dataset for describing  aggregate data on the total number of Indian students that attended  private schools in school year 2015-16. However, we determined the data  were not sufficiently reliable for analysis of the specific locations of private  schools. Unlike the CCD which captures data on the universe of public  schools, the PSS is based on a sample of private schools, according to  Education’s PSS survey documentation. The official in Education’s  National Center for Education Statistics (NCES) who is responsible for  the PSS told us that the PSS sample captured only about half of the  private schools in the nation. We further explored using the broader list of  private schools from which Education draws the PSS sample, however  the PSS documentation showed that this list contained more than 10,000  entities—or 30 percent of the entire list—that were not private schools.  We confirmed this information with the same NCES official. Based on our  review of the PSS documentation, as well as our discussions with  cognizant NCES officials, we determined that it would not be possible to  use the PSS data to comprehensively and accurately map the locations of  these private schools nationally or in specific areas with large Indian  student populations.

To analyze school choice options in school districts with large Indian  student populations, we analyzed all relevant schools within the public  school district’s geographic boundary regardless of the administrative  school district it was assigned to in the CCD. This allowed us to account  for all public schools and BIE schools in a given area that could be an  option for Indian students. It was necessary because, for example,  charter schools or BIE schools are sometimes recorded in the CCD as  their “own district,” i.e., separate from the public school district for a given  area because of the local public school administrative structure.

We further examined school choice based on a school district’s location in  urban and rural areas. The CCD collects location data using  classifications ranging from large cities to remote rural areas. For  analysis, we collapsed these classifications into two categories,  consistent with Education’s analyses: (1) urban areas, i.e., locations  classified as cities or suburbs, and (2) rural areas, i.e., locations classified  as towns or rural.

This appendix contains maps of selected regions of the country to provide  a more in-depth view of the school choice options available in school  districts in which American Indian and Alaska Native students accounted  for 25 percent or more of all students in the district.

Appendix III: Comments from the Department of Education

Appendix IV: GAO Contact and Staff Acknowledgments

In addition to the contact named above, Bill Keller (Assistant Director),  David Watsula (Analyst-in-Charge), Susan Aschoff, James Bennett,  Deborah Bland, Connor Kincaid, Jean McSween, John Mingus, James  Rebbe, and Leanne Violette made key contributions to this report.

Private School Choice: Requirements for Students and Donors  Participating in State Tax Credit Scholarship Programs. GAO-18-679.  (Washington, D.C.: September 18, 2018).

Broadband Internet: FCC’s Data Overstate Access on Tribal Lands.  GAO-18-630. (Washington, D.C.: September 7, 2018).

Native American Youth: Involvement in Justice Systems and Information  on Grants to Help Address Juvenile Delinquency. GAO-18-591.  (Washington, D.C.: September 5, 2018).

High Risk: Agencies Need to Continue Efforts to Address Management  Weaknesses of Federal Programs Serving Indian Tribes. GAO-18-616T.  (Washington, D.C.: June 13, 2018).

Private School Choice: Federal Actions Needed to Ensure Parents are  Notified about Changes in Rights for Students with Disabilities.  GAO-18-94. (Washington, D.C.: November 16, 2017).

Tribal Transportation: Better Data Could Improve Road Management and  Inform Indian Student Attendance Strategies. GAO-17-423. (Washington,  D.C.: May 22, 2017).

School Choice: Private School Choice Programs Are Growing and Can  Complicate Providing Certain Federally Funded Services to Eligible  Students. GAO-16-712. (Washington, D.C.: August 11, 2016).

Indian Affairs: Bureau of Indian Education Needs to Improve Oversight of  School Spending. GAO-15-121. (Washington, D.C.: November 13, 2014).

Indian Affairs: Better Management and Accountability Needed to Improve  Indian Education. GAO-13-774. (Washington, D.C.: September 24, 2013).

American Indian and Alaska Native communities are looking for high-quality educational opportunities that also reflect their languages and cultures. Different types of public schools (e.g., charter, magnet, and career and technical education schools) may provide more choices.

We found that many Indian students have limited public school options. Most school districts with at least 25% Indian students only offered traditional public schools. Many of these districts are in rural areas, where there may not be enough total students to justify additional schools. Districts in large urban areas often had more choices.