More than 100 rural hospitals have closed in past decade

Time - More than 100 rural hospitals have closed in the past decade, according to the Center for Healthcare Quality and Payment Reform (CHQPR), a national policy center that works to improve health care payment systems and whose data have been cited by the Bipartisan Policy Center. About one-third of all rural hospitals in the country are at risk of closing because of financial problems. In Alabama, 23 rural hospitals—about half of all of them in the state—are at immediate risk of closing, according to CHQPR.

Even more rural hospitals might be in trouble if Congress passes the huge piece of legislation before it, called the One Big Beautiful Bill Act, which includes significant cuts that would slash Medicaid spending in rural areas by $119 billion over 10 years, according to KFF. Thom Tillis, the U.S. Senator from North Carolina who said he couldn’t support the bill in its current form, said in a statement on June 28 that Congress needed to achieve the tax cuts and spending in the bill “without hurting our rural communities and hospitals.”

People often blame rural hospital closures on poor reimbursement rates from Medicare and Medicaid. There’s a reason for that assumption: Just about every hospital loses money on Medicaid and Medicare, since reimbursement rates are low nationwide. But hospitals like the one in Thomasville are struggling not because they serve a large share of poor patients or elderly people on these plans. 

“When you look at the data, what you see is that Medicare and Medicaid are not the problem,” says Harold Miller, president and CEO of CHQPR. “The problem is private insurers.”

Rural hospitals depend on private insurers for the majority of their patient costs, Miller says. In Alabama, for instance, CHQPR’s data shows that most rural hospitals depend on private insurers for anywhere between 65-80% of patient costs; in Thomasville, 18.4% of patients were using Medicare to pay for their coverage, 16.2% were using Medicaid, and 65.4% were using private insurance.

But many rural hospitals are losing money on what private insurers will pay for patient care. The one in Thomasville, for instance, was getting paid by private insurers roughly half of what it was costing to deliver services, according to federal data compiled by CHQPR.  

This is a very different situation than what is happening between private insurers and urban hospitals, he says. Urban hospitals and large rural hospitals are able to make up for the losses from Medicare and Medicaid patients with what they can charge private insurers. Small rural hospitals can’t do that.