More than half of rural hospitals had positive margins in 2023, but financial challenges still cause many to close service lines or their operations entirely, KFF Health News found.
KFF Health News collected data from Medicare cost reports, the American Hospital Association Survey Database, and other sources to create its “10 Things to Know About Rural Hospitals” report, published April 16. Rural hospitals are defined as those in nonmetropolitan areas, and rural areas were broken down into those that were adjacent to metropolitan areas and those that were not. The analysis primarily focused on community hospitals or nonfederal general short-term hospitals. Read the full methodology here.
Here are 34 numbers to know:
1. Almost 1,800, or 35%, of all community hospitals were in rural areas, and rural hospitals accounted for 8% of all discharges nationwide. Forty-four percent of rural hospitals were in areas not adjacent to a metropolitan area. Forty-six million people lived in rural areas, and 88% lived in a county with a hospital.
2. Rural hospitals operate in 48 states and account for at least a third of hospitals in 31 of those states. In 17 states, rural hospitals make up at least half of all hospitals. Rural hospitals accounted for at least 70% of hospitals in Montana, Nebraska, South Dakota, North Dakota and Wyoming. Rural hospitals have lower capacity, with about 50% having 25 beds or fewer, compared to 14% of urban hospitals. One-third of rural hospitals are owned by state or local governments, and 52% are part of a broader health system.
3. The largest share of discharges in rural areas is covered by Medicare at 53%, followed by Medicaid at 19% and private insurance at 19%.
4. Medicaid covered 1.5 million births, or 41% of all U.S. births, and financed 47% of births in rural areas. However, from 2010 to 2022, 238 rural hospitals closed obstetrics units while only 26 hospitals opened new units. Low Medicaid reimbursement rates and difficulty recruiting providers were the greatest challenges to providing OB-GYN care in rural areas.
5. More than half of rural hospitals had positive operating margins in 2023, and 19% had margins of at least 10%. Those with positive margins were more likely to have more beds andhigher occupancy, and were affiliated with a health system and not government-owned in 2023. For-profit and nonprofit rural hospitals also had more positive margins compared to rural hospitals overall.
6. Rural hospitals in states that did not adopt Medicaid expansion were more likely to have negative margins than those in expansion states. Negative margins were also more common among those in the most rural areas not adjacent to a metropolitan area. A larger share of rural hospitals had negative operating margins at 44%, compared to 35% of urban hospitals. This was worse for hospitals in counties that were not adjacent to a metropolitan area (49%), had 26 to 99 beds (52%) and were not affiliated with a broader health system (51%). For nonfederal, government-owned hospitals — which make up a third of rural community hospitals — 54% had negative margins. Forty percent of critical access hospitals and 37% of rural referral centers reported negative margins in 2023, a smaller share than hospitals in other designated categories, such as sole community hospitals.
7. Between 2005 and 2024, 193 rural hospitals closed. Sixty-nine percent of rural hospital closures between 2014 and 2024 occurred in states that had not expanded Medicaid.
8. Medicare Advantage reimburses rural hospitals at lower rates than traditional Medicare on average, the American Hospital Association found.
9. In April 2025, the House and Senate passed a concurrent budget resolution to cut the federal deficit by at least $880 billion over ten years. This would require significant cuts to Medicaid, which would likely impact hospitals, as hospital care accounts for about a third of Medicaid spending in 2023.
