The Commercial Alternative to Traditional Medicare Is Putting Financial Strain on Rural Hospitals

For more than a dozen years, leaders in the rural health care field have issued strong warnings: Rural hospitals are struggling financially.

Despite public attention and some changes in federal policies, difficulties continue. A new report from a private healthcare consulting company has found that nearly 20% of all rural hospitals are at risk of closing.

The report, issued annually by the Chartis Center for Rural Health, said the percentage of rural hospitals operating in the red jumped to 50%, up from 43% last year. Of the independent rural hospitals across the country, 55% were operating in the red. More than 60% of rural hospitals are affiliated with larger health-systems. Of those, 42% were operating in the red.

All told, Chartis identified 418 of the 2,115 of the rural hospitals as “vulnerable to closure.” Since 2020, 35 rural hospitals have closed, including nine last year. Nearly 200 rural hospitals have closed since 2005.

“I think we’re in a much, much worse situation,” Michael Topchik, national leader for the Chartis Center for Rural Health said in an interview with the Daily Yonder. “I mean, more than 15 years ago, I remember sharing some of these statistics… and there was a little bit of ‘Chicken Little’ in the air with a third of rural hospitals operating in the red… Now, to see half of rural hospitals operating in the red… in the absence of something being done, things have just gotten more challenging.”

Those increased challenges include changes to Medicare and Medicaid reimbursement rates, changes to how hospitals are categorized, and what services hospitals are able to provide, among other things.

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