From Becker’s Financial Management
More than 700 rural U.S. hospitals are at risk of closure due to financial problems, with more than half of those hospitals at immediate risk of closure.
The latest analysis from the Center for Healthcare Quality and Payment Reform, based on CMS’s July 2024 hospital financial information, reveals the financial vulnerability of rural hospitals in two categories: risk of closure and immediate risk of closure.
In the first category, nearly every state has hospitals at risk of closure, measured by financial reserves that can cover losses on patient services for only six to seven years. In over half the states, 25% or more of rural hospitals face this risk, with nine states having a majority of their rural hospitals in jeopardy.
The report also analyzes hospitals facing immediate threat of closure meaning financial reserves could offset losses on patient services for two to three years at most. Currently, 360 rural hospitals are at immediate risk of shutting down due to severe financial difficulties.
“The primary reason hundreds of rural hospitals are at risk of closing is that private insurance plans are paying them less than what it costs to deliver services to patients,” CHQPR notes in its report, identifying losses on private insurance patients as the biggest cause of overall financial losses.
“Most ‘solutions’ for rural hospitals have focused on increasing Medicare or Medicaid payments or expanding Medicaid eligibility due to a mistaken belief that most rural patients are insured by Medicare and Medicaid or are uninsured,” according to the CHQPR report. “In reality, about half of the services at the average rural hospital are delivered to patients with private insurance (both employer-sponsored insurance and Medicare Advantage plans). In most cases, the amounts these private plans pay, not Medicare or Medicaid payments, determine whether a rural hospital loses money.”
To preserve and enhance essential hospital services in rural areas, CHQPR recommends that small rural hospitals receive Standby Capacity Payments from both private and public payers. These payments would cover the hospital’s fixed costs for maintaining essential services, ensuring that rural communities continue to have access to necessary healthcare.
Below is a state-by-state listing of the number of rural hospitals at risk of closure in the next six to seven years and at immediate risk of closure over the next two to three years.
Alabama
28 hospitals at risk of closing (54%)
24 at immediate risk of closing in next 2-3 years (46%)
Alaska
2 hospitals at risk of closing (12%)
1 at immediate risk of closing in next 2-3 years (6%)
Arizona
2 hospitals at risk of closing (7%)
1 at immediate risk of closing in next 2-3 years (4%)
Arkansas
25 hospitals at risk of closing (54%)
13 at immediate risk of closing in next 2-3 years (28%)
California
23 hospitals at risk of closing (40%)
10 at immediate risk of closing in next 2-3 years (17%)
Colorado
10 hospitals at risk of closing (23%)
6 at immediate risk of closing in next 2-3 years (14%)
Connecticut
2 hospitals at risk of closing (67%)
1 at immediate risk of closing in next 2-3 years (33%)
Delaware
0 hospitals at risk of closing
0 at immediate risk of closing in next 2-3 years
Florida
8 hospitals at risk of closing (36%)
5 at immediate risk of closing in next 2-3 years (23%)
Georgia
22 hospitals at risk of closing (32%)
11 at immediate risk of closing in next 2-3 years (16%)
Hawaii
8 hospitals at risk of closing (62%)
0 at immediate risk of closing in next 2-3 years
Idaho
7 hospitals at risk of closing (24%)
0 at immediate risk of closing in next 2-3 years
Illinois
12 hospitals at risk of closing (16%)
7 at immediate risk of closing in next 2-3 years 9%)
Indiana
5 hospitals at risk of closing (9%)
4 at immediate risk of closing in next 2-3 years (7%)
Iowa
29 hospitals at risk of closing (31%)
10 at immediate risk of closing in next 2-3 years (11%)
Kansas
62 hospitals at risk of closing (63%)
31 at immediate risk of closing in next 2-3 years (32%)
Kentucky
13 hospitals at risk of closing (18%)
6 at immediate risk of closing in next 2-3 years (8%)
Louisiana
24 hospitals at risk of closing (44%)
12 at immediate risk of closing in next 2-3 years (22%)
Maine
10 hospitals at risk of closing (40%)
6 at immediate risk of closing in next 2-3 years (24%)
Maryland
0 hospitals at risk of closing
0 at immediate risk of closing in next 2-3 years
Massachusetts
2 hospitals at risk of closing (33%)
1 at immediate risk of closing in next 2-3 years (17%)
Michigan
15 hospitals at risk of closing (23%)
7 at immediate risk of closing in next 2-3 years (11%)
Minnesota
19 hospitals at risk of closing (20%)
7 at immediate risk of closing in next 2-3 years (7%)
Mississippi
35 hospitals at risk of closing (52%)
25 at immediate risk of closing in next 2-3 years (37%)
Missouri
20 hospitals at risk of closing (34%)
10 at immediate risk of closing in next 2-3 years (17%)
Montana
14 hospitals at risk of closing (25%)
4 at immediate risk of closing in next 2-3 years (7%)
Nebraska
5 hospitals at risk of closing (7%)
2 at immediate risk of closing in next 2-3 years (3%)
Nevada
5 hospitals at risk of closing (36%)
3 at immediate risk of closing in next 2-3 years (21%)
New Hampshire
2 hospitals at risk of closing (12%)
0 at immediate risk of closing in next 2-3 years
New Jersey
0 hospitals at risk of closing
0 at immediate risk of closing in next 2-3 years
New Mexico
7 hospitals at risk of closing (26%)
6 at immediate risk of closing in next 2-3 years (22%)
New York
29 hospitals at risk of closing (56%)
20 at immediate risk of closing in next 2-3 years (38%)
North Carolina
6 hospitals at risk of closing (11%)
5 at immediate risk of closing in next 2-3 years (9%)
North Dakota
13 hospitals at risk of closing (33%)
5 at immediate risk of closing in next 2-3 years (13%)
Ohio
5 hospitals at risk of closing (7%)
2 at immediate risk of closing in next 2-3 years (3%)
Oklahoma
39 hospitals at risk of closing (50%)
26 at immediate risk of closing in next 2-3 years (33%)
Oregon
8 hospitals at risk of closing (24%)
2 at immediate risk of closing in next 2-3 years (6%)
Pennsylvania
13 hospitals at risk of closing (30%)
7 at immediate risk of closing in next 2-3 years (16%)
Rhode Island
0 hospitals at risk of closing
0 at immediate risk of closing in next 2-3 years
South Carolina
10 hospitals at risk of closing (40%)
5 at immediate risk of closing in next 2-3 years (20%)
South Dakota
8 hospitals at risk of closing (16%)
4 at immediate risk of closing in next 2-3 years (8%)
Tennessee
19 hospitals at risk of closing (36%)
17 at immediate risk of closing in next 2-3 years (32%)
Texas
80 hospitals at risk of closing (50%)
30 at immediate risk of closing in next 2-3 years (19%)
Utah
0 hospitals at risk of closing
0 at immediate risk of closing in next 2-3 years
Vermont
8 hospitals at risk of closing (62%)
4 at immediate risk of closing in next 2-3 years (31%)
Virginia
9 hospitals at risk of closing (30%)
8 at immediate risk of closing in next 2-3 years (27%)
Washington
16 hospitals at risk of closing (36%)
4 at immediate risk of closing in next 2-3 years (9%)
West Virginia
11 hospitals at risk of closing (35%)
5 at immediate risk of closing in next 2-3 years (16%)
Wisconsin
7 hospitals at risk of closing (9%)
1 at immediate risk of closing in next 2-3 years (1%)
Wyoming
6 hospitals at risk of closing (24%)
2 at immediate risk of closing in next 2-3 years (8%)