Over 40% of roughly 1,800 U.S. rural hospitals have negative operating margins, with hundreds at high financial risk, according to an Oct. 13 report from the American Hospital Association.
The report, “America’s Rural Hospitals at a Crossroads,” highlights the longstanding structural pressures being compounded by industry and policy changes, threatening care access for the more than 46 million Americans in rural communities.
“The challenges confronting rural hospitals are both longstanding and intensifying,” the report said. “Structural pressures, including low patient volumes, workforce shortages, geographic isolation and inadequate reimbursement, have left many facilities operating on increasingly fragile financial footing. Recent policy changes and payer trends will magnify those pressures, increasing the risk of service reductions and hospital closures.”
Rural hospital closures have also been associated with higher mortality, population decline, slower economic growth, increased unemployment across hospitals and non-healthcare industries, and increased poverty and lower income levels, the report said.
In 2026, Becker’s has reported on just six planned hospital and emergency department closures. At this point in 2025, Becker’s had already reported on 22. While some may view this positively, many healthcare leaders suggest the financial strain hasn’t eased but is showing up in areas like service line cuts and rural emergency hospital conversions and consolidations.
Here are eight findings from the report:
- Approximately 72% of all rural hospital discharges are covered by Medicare and Medicaid, but both pay below the cost of care. More than $7 billion in Medicare underpayments was absorbed by rural hospitals in 2024, up 26% from 2020.
- Rural hospitals often see older, sicker and poorer patients. In 2024, they provided more than $5 billion in uncompensated care.
- Medicaid cuts under HR 1 are estimated to reduce federal Medicaid spending in rural areas by nearly $140 billion, increase rural hospital uncompensated care costs by nearly $20 billion and put more than 300 rural hospitals at risk of closure, conversion or service reductions.
- In 2026 alone, the expiration of enhanced ACA premium tax credits is estimated to cost rural hospitals $1.6 billion in revenue.
- Medicare Advantage plans paid rural hospitals 91% of traditional Medicare rates on a cost basis in 2024. The AHA estimates the gap that year cost rural hospitals more than $1 billion.
- In recent years, 331 rural hospitals ended obstetric services and 448 stopped offering chemotherapy. Over 150 rural hospitals have closed or converted since 2010. On the maternity front, Becker’s has covered 24 related service closures in 2026.
- Rural areas average 30 physicians per 100,000 people, compared with 263 in urban areas. That rural physician workforce is expected to decline by more than 20% by 2030 due to retirements.
- Aging infrastructure is also a major factor, with many rural hospitals built nearly eight decades ago. Roughly four in 10 rural hospitals have aging facilities in need of infrastructure and technology upgrades.
“Rural hospitals continue to respond through innovation, partnerships, telehealth expansion and care redesign,” the report said. “But innovation cannot offset inadequate payment and mounting financial instability on its own. Policymakers should reverse the harmful cuts to Medicaid under OBBBA and ensure [Rural Health Transformation Program] dollars flow directly to hospitals, rather than being absorbed elsewhere, so that funding matches the scale of what rural communities have lost.”
Becker’s 3rd Annual Fall Chief Pharmacy Officer Summit is the top tier event that the people leading the future of pharmacy convene. This 3-day event is built specifically for Chief Pharmacy Officers and senior pharmacy leaders. The sessions examine the workforce, financial and clinical priorities shaping pharmacy today. Becker’s is where candid discussions flourish and new ideas thrive. Becker's 3rd Annual Fall Chief Pharmacy Officer Summit
