Rural hospital closures remain a growing concern despite slight financial improvement

Editor's Note

While fewer rural hospitals are operating at a loss than last year, more are now at risk of closure, according to a new report from Chartis. Fierce Healthcare reported the news February 13.

As detailed in the article, the analysis found that 46% of rural hospitals are operating in the red, a slight improvement from 50% in 2024, yet 432 hospitals are now deemed vulnerable to closure—an increase from 418 the previous year. Closures or shifts away from inpatient care have continued, with 18 rural hospitals shutting down or transitioning to new care models in the past year.

Financial stability varies widely across the country, Fierce Healthcare reports. The nationwide median rural hospital operating margin is just 1%, but 16 states report negative medians, with Connecticut, Kansas, Washington, Oklahoma, and Wyoming among the hardest hit. A growing divide exists between Medicaid expansion and non-expansion states. Rural hospitals in Medicaid expansion states have a median margin of 1.5%, with 43% operating at a loss, whereas non-expansion states report a median margin of -1.5%, with 53% running in the red. States such as Arkansas, Mississippi, Kansas, and Tennessee face the highest percentage of hospitals at risk of closing.

Additionally, access to care continues to erode. According to the article, inpatient services have ended in 182 rural communities since 2010 due to closures or transitions to alternative care models. Obstetric services have also been heavily impacted, with 293 rural hospitals eliminating OB units since 2011, while 424 hospitals discontinued chemotherapy services between 2014 and 2023—a loss of 21% of all rural chemotherapy providers.

The report highlights multiple pressures contributing to rural hospital instability. According to the article, A 2% Medicare reimbursement cut this year is expected to cost rural hospitals $509 million and lead to over 8,000 job losses. Additionally, the rise in Medicare Advantage enrollments is creating greater administrative challenges and payment delays.

Despite these challenges, there are signs of hope, Fierce Healthcare reports. The Rural Emergency Hospital (REH) designation has helped 32 communities maintain essential services, and partnerships between hospitals and local organizations have improved community health efforts. Meanwhile, a separate Wipfli survey found that nearly all rural healthcare leaders are at least cautiously optimistic about their financial viability—though experts caution that recent political developments could change that outlook.