Study: Rural hospital mergers, acquisitions boost financial stability, care access

Editor's Note

Data show nearly half of rural hospitals categorized as high-risk financially improved their stability after mergers, acquisitions, or affiliations (M&A) with larger health systems, Fierce Healthcare reported December 2.

Conducted by Dobson DaVanzo & Associates and commissioned by the Coalition to Strengthen America’s Healthcare, the analysis found that 110 rural hospitals closed between 2011 and 2021, more than half of which were standalone facilities, Fierce Healthcare reports. Today, 15% of rural hospitals are at high financial risk, and another 21% could face similar threats soon. These closures can lead to care deserts, worsening health outcomes, and economic decline.

M&A offers a potential lifeline. As detailed in the article, 66% of rural hospitals acquired by or affiliated with larger systems moved out of the high-risk category, compared to only 18% before affiliation. Average total margins rose from 1.8% to 2.2% after acquisitions and from 1.5% to 2.3% after affiliations.

According to the article, the analysis points to benefits beyond financials. Integration improves patient care and operational efficiency by addressing staffing shortages, standardizing care protocols, and fostering innovation. M&A also facilitates technology updates, logistical support, and cost-reduction strategies that enhance quality and sustainability. The report concluded that M&A is not a universal solution but can be instrumental in preserving rural hospitals and maintaining critical community services.