10 Things to Know about Rural Hospitals

KFF, an independent not-for-profit organization that does research on health policy, recently published a report on rural hospitals. Recent concerns about reducing Medicaid spending could have a detrimental effect on these hospitals' financial viability. Rural hospitals more frequently run negative operating margins compared to urban hospitals. And rural hospitals in states that have not adopted the Affordable Care Act are more likely to run negative operating margins that rural hospitals in expansion states. Here are the 10 things to know about rural hospitals:

1. They account for one-third of all community hospitals nationwide and at least a third of all hospitals in most states.

2. Medicare covered a large share of hospital discharges in rural than urban areas in 2023.

3. Medicaid covered nearly half of all births in rural areas in 2023.

4. A large share of rural than urban hospitals had negative operating margins in 2023, though more than half of all rural hospitals had positive operating margins.

5. Among rural hospitals, positive margins were more common among those that had more beds higher occupancy, were affiliated with a health system, and were not government-owned in 2023.

6. The Affordable Care Act Medicaid expansion has helped improve hospital finances, and may especially benefit rural hospitals.

7. Hospital closures outpaced openings in rural areas from 2017 to 2024, and many rural hospitals have dropped specific service lines over time.

8. Medicare provides additional funding for the large majority of rural hospitals through special payment designations.

9. Even with additional funds, about half of sole community, Medicare-dependent, and low-volume hospitals had negative operating margins in 2023.

10. Significant reductions in federal spending on health care under consideration would have direct and indirect implications for rural hospitals.

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