“More than 700 of the rural hospitals in the country are at risk of closing because of the serious financial problems they are experiencing,” reports the Center for Healthcare Quality & Payment Reform in a June Report.  What’s more, “Over 300 of these rural hospitals are at immediate risk of closing. . .”

The financial safety net they have used in the past to stay afloat is now riddled with holes according to the Center, which states “Many hospitals have managed to remain open despite losses on patient services because they receive local tax revenues or government grants. However, there is no guarantee that these funds will continue to be available in the future or that they will be sufficient to cover higher costs. The special federal assistance many hospitals received during the pandemic has now ended. As a result, more than one-third of rural hospitals lost money, overall, in 2023-24.

One of the basic reasons that these hospitals are at risk is that the payments they receive from private health plans are inadequate to cover their costs. Surprisingly, although these hospital are losing money from their Medicaid patients, it’s the “losses on private insurance patents (that) are the biggest cause of overall losses,” according to the report.

This is a potential humanitarian crisis if sick people must travel longer distances to get medical care; it also affects the ability of energy facilities, farms or other agricultural businesses to attract workers if they are less able to get health care. 

There is a role for both private sector corporations and local government to play in stemming the tide of closures. It’s clear, according to the report that, “most private insurance plans are unlikely to increase or change their payments unless businesses, local governments and residents choose health plans based on whether they pay enough to sustain local healthcare services.”

Though this phenomenon is particularly fearsome now, it’s not new. Over the last ten years over 100 rural hospitals have closed, with Texas and Tennessee representing about a quarter of that number. Texas had experienced the loss of 14 rural hospitals and Tennessee saw the doors of 11 closed.

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