Texas has 80 hospitals at risk closing — the most of any state — and 30 hospitals at immediate risk of closure, according to the report. In Kansas, 62 rural hospitals are at risk of closing and 31 are at immediate risk. The center found only five states have no rural hospitals at risk of closing: Delaware, Maryland, New Jersey, Rhode Island and Utah. Rural hospitals at risk of closing are losing money on patient services but could access other funding, and those with immediate risk could close within three years due to their lack of resources.
Texas, Tennessee and Kansas have had the most rural hospital closures since 2015, with 14, 11 and eight facility closures respectively.
Closures present significant access issues in communities that are already medically underserved, exacerbating social determinants of health and making it harder for patients to seek preventive care and health maintenance services for conditions such as diabetes or heart failure.
“For small rural communities, in many cases, there is no urgent care center, laboratory or primary care,” Miller said. “So when the hospital closes, the community loses everything.”
He said the rural emergency hospital program has kept more than two dozen hospitals open with a boost to Medicare outpatient reimbursement and an annual facility fee payment, but the trade-off has been thousands of patients losing easy access to inpatient services.
Rural populations already have higher rates of the top 10 causes of death than those in urban areas, said Michael Topchik, executive director of the Chartis Center for Rural Health. Equitable treatment in rural areas becomes impossible without widely available care, he said.
The Center for Healthcare Quality and Payment Reform's report said inadequate payments from private health plans are the biggest contributor to rural hospitals’ financial losses, as patients with private plans account for about half of the services at an average rural hospital when Medicare Advantage plans are included.
Rural hospitals that aren’t at risk of closing usually receive larger payments from private health plans that offset any losses on services delivered to uninsured and Medicaid patients, Miller said.
System leaders have also cited increased enrollment in Medicare Advantage plans as a reason for rural facilities’ financial hardships, as the plans do not reimburse hospitals at the same rate as traditional Medicare.
Between 2019 and 2023, the number of rural residents enrolled in Medicare Advantage grew from 6.3 million to 9.2 million, according to a February analysis from the Chartis Group, a healthcare consulting organization.
Medicare Advantage comes with substantial administrative burden for rural hospital leaders in the form of denials, delayed payments and more challenging prior authorizations for care that would be standard under traditional Medicare coverage, Topchik said.
“Over the last five years, where we've seen a huge increase in Medicare Advantage, we've also seen the biggest decrease in hospital operating margins,” he said.
Half of the country’s more than 2,000 rural hospitals are operating in the red in 2024, compared with 43% in 2023, the Chartis Group analysis found.
Affiliations and robust partnerships with larger health systems and urban facilities are also factors in rural hospitals achieving better margins, Topchik said.
The Center for Healthcare Quality and Payment Reform recommends health plans reimburse struggling rural hospitals with a standby capacity payment instead of fixed costs for services, Miller said.
The payment would allow hospitals to be reimbursed for those standby costs, regardless of whether services are used by community members, he said. This way rural facilities would be able to keep running even if fewer patients access inpatient or emergency room services.
Higher reimbursement rates from Medicare and Medicaid, as well as streamlined care approval processes from Medicare Advantage plans could help struggling rural facilities as well, Topchik said.
“Things are tough and they're getting tougher,” he said. “There is a challenge in rural America with providing equitable access to affordable, high-quality care. It's going to require action to support safety-net hospitals that are under great strain.”
