June 30, 2023
Rural hospital closures rising again with end of COVID aid
After a brief reprieve thanks to COVID relief funds, rural hospital closures are once again on the rise, with 11 facilities already closing in the first half of this year. More rural facilities have already closed in 2023 than the previous two years combined, and this year is on pace to be the second-highest number of rural hospital beds lost since 2005. And the majority of rural hospitals that haven’t closed are experiencing negative operating margins, with almost one in three at immediate or high risk of closure due to declining volumes, shifting payer mix, and increased labor and supply costs. Leaders at rural hospitals now face difficult decisions including drastically cutting services, merging with a larger system, or closing their doors altogether. The Centers for Medicare and Medicaid Services (CMS) launched the Rural Emergency Hospital Program recently, designed to financially support small rural hospitals that convert to providing emergency services only, but so far program uptake has been limited. While efforts to prop up hospitals will help to sustain access to care in the near term, rural communities ultimately need a new model for care, with reimagined facilities, supported by enhanced virtual connections to specialists and higher-acuity services.