Varying Trends In The Financial Viability Of US Rural Hospitals, 2011–17

Health Affairs

The financial viability of rural hospitals has been a matter of serious concern, with ongoing closures affecting rural residents’ access to medical services. We examined the financial viability of 1,004 US rural hospitals that had consistent rural status in 2011–17. The median overall profit margin improved for nonprofit critical access hospitals (from 2.5 percent to 3.2 percent) but declined for other hospitals (from 3.0 percent to 2.6 percent for nonprofit non–critical access hospitals, from 3.2 percent to 0.4 percent for for-profit critical access hospitals, and from 5.7 percent to 1.6 percent for for-profit non–critical access hospitals). Occupancy rate and charge markup were positively associated with overall margins: In 2017 hospitals with low versus high occupancy rates had median overall profit margins of 0.1 percent versus 4.7 percent, and hospitals with low versus high charge markups had median overall margins of 1.8 percent versus 3.5 percent. Rural hospital financial viability deteriorated in states that did not expand eligibility for Medicaid and was lower in the South. Rural hospitals that closed during the study period had a median overall profit margin of −3.2 percent in their final year before closure. Policy makers should compare the incremental cost of providing essential services between hospitals and other settings to balance access and efficiency.

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