More than 700 rural hospitals, about 1 in 3 nationwide, could shut their doors

Rural hospitals continue to face serious financial pressures, and almost one-third of the nation’s rural hospitals are at risk of closure.

Sacred Heart Hospital in Eau Claire, Wisconsin closed its doors this spring. A new report suggests more than 700 rural hospitals nationwide are at risk of shutting down.

More than 700 rural hospitals (31% of America’s rural hospitals) are facing the possibility of shutting down, according to a recent report from the Center for Healthcare Quality & Payment Reform.

Some are facing more grave circumstances. Nationwide, 360 rural hospitals, or 16% of all rural hospitals, are considered at immediate risk of closure, according to the report.

Nearly every state has some rural hospitals facing the risk of going under, the center says. In nine states, half or more of their rural hospitals are facing the possibility of closure, including Kansas (63%), New York (56%), Texas (50%), Oklahoma (50%), Mississippi (52%), and Alabama (54%).

Texas has the largest number of rural hospitals (80) facing the possibility of closure, but Kansas edges the Lone Star State in the number of rural hospitals at immediate risk of closure (31 to 30).

The center notes that many rural hospitals are losing money on patient care, saying that insurers don’t provide enough reimbursements. While facilities also struggle with inadequate government reimbursements, “losses on private insurance patients are the biggest cause of overall losses,” the center said in the report.

Rural hospitals also have lower reserves to weather financial troubles, the report notes.

The Hospital Sisters Health System closed two rural Wisconsin hospitals in the spring: Sacred Heart Hospital in Eau Claire and St. Joseph’s Hospital in Chippewa Falls. Both hospitals had served their communities since the late 1800s, but system officials cited workforce constraints and local market challenges.

MercyOne announced this week that it is closing the Primghar Medical Center, a small hospital in northwest Iowa, in September.

‘A challenging position’

Erik Swanson, senior vice president at Kaufman Hall, tells Chief Healthcare Executive®, in a recent interview that it’s clear many rural hospitals are struggling.

But Swanson says there is some encouraging news with volume stabilizing, which is especially important for rural hospitals. “That variation in volume is very, very difficult for very small rural hospitals to handle, and some of that variation is going away,” he says.

“We are seeing signs of improvement, but they're still going to be in a challenging position,” he says.

Jay Anders, MD, chief medical officer for Medicomp Systems, outlined the difficulties of rural hospitals in a recent interview with Chief Healthcare Executive®. He noted that as some rural hospitals have been acquired by larger systems, some of those services have moved into larger cities and suburbs. While some of those acquisitions may ensure that those rural hospitals stay afloat, he says there can be hardships for patients if they have to travel more for care.

“Looking at it from just a patient care standpoint, when that happens, a lot of the more specialized care that has been provided more rurally, starts to move more centrally into larger cities,” Anders said. “And that could be 90 minutes away, could be two hours away. And if you look at how patients' families are involved in patient care, it puts a real burden on a family when when a loved one is in a hospital, it's a 90-minutes drive to go see them and be with them.”

Former Pennsylvania Gov. Tom Corbett highlighted some of the difficulties of rural hospitals in an Aug. 2 op-ed in The Pittsburgh Post-Gazette. He noted that Medicare reimbursements are insufficient, and noted that 60% of Pennsylvania’s rural hospitals don’t offer labor and delivery services, with many ending obstetric services over since 2011.

“Clearly, we should fo­cus on ex­pand­ing and strength­en­ing hos­pi­tal care in our state, es­pe­cially our ru­ral ar­eas,” Corbett wrote.

The Bucktail Medical Center, a small rural hospital in central Pennsylvania, took the unusual step of launching a GoFundMe page last year to raise money to keep the doors open. The effort raised more than $114,000. The medical center remains open, though it announced in May that it was closing its long-term care facility.

Half in the red

Other reports have outlined the troubling financial landscape for rural hospitals. Half of America’s rural hospitals are losing money, according to a report issued earlier this year by the Chartis Center for Rural Health. Many hospitals are also reducing services as they make hard choices to keep serving their communities.

Since 2010, more than 130 rural hospitals have closed, according to an American Hospital Association report.

Many hospitals nationwide are facing staffing shortages, but rural hospitals are having an especially difficult time recruiting and retaining clinicians and other vital workers. Sunny Eappen, president and CEO of The University of Vermont Health Network, said in a July 2023 roundtable that the difficulty goes beyond hiring doctors.

“It’s not just the medical college,” he said. “It's the school of nursing. We need respiratory techs, we need folks that are working in food service. We need everything quite frankly.”

The Center for Healthcare Quality & Payment Reform called for better reimbursements from the government and private insurers to rural hospitals. The center said a federal investment of an additional $5 billion, which it noted is one-tenth of 1% of national healthcare spending, would be enough to prevent the closure of vulnerable rural hospitals.

Read more: When rural hospitals close, nearby hospitals feel the pain