More than 700 rural hospitals across the United States — nearly one-third of the total — are at risk of shutting down due to severe financial challenges, according to a June 2025 report by the Center for Healthcare Quality and Payment Reform (CHQPR). Of those, over 300 are in immediate jeopardy.

The closures would leave millions of rural residents without nearby access to essential services like emergency care, inpatient treatment, diagnostic testing, and in many cases, even primary care. More than 100 rural hospitals have already closed over the past decade, and since early 2023, at least 40 have eliminated inpatient care to qualify for a federal designation as Rural Emergency Hospitals (REHs), which comes with financial incentives but limits services.

At the core of the issue is inadequate reimbursement from private insurance plans. The report highlights that although rural hospitals often serve Medicaid and uninsured patients, the largest financial losses stem from private insurers paying below the actual cost of care delivery. Hospitals that remain financially stable typically receive higher payments from private plans, helping offset deficits from publicly insured or uninsured patients.
“Most so-called solutions have focused on Medicare or Medicaid, but about half of rural hospital services are provided to patients with private insurance,” the report states. “Whether a rural hospital remains open often depends on how much private health plans pay.”

To prevent further closures, CHQPR recommends several reforms. These include requiring all insurance plans — especially Medicare Advantage — to reimburse rural hospitals at levels that reflect the higher per-patient costs typical in low-volume settings. The organization also advocates for the introduction of "Standby Capacity Payments," which would compensate facilities for maintaining 24/7 readiness for emergencies, a key cost that current payment models do not adequately support.

The estimated price tag for stabilizing rural hospitals is around $6 billion annually; roughly one-tenth of 1% of total U.S. healthcare spending. Without intervention, the report warns that closures will not only compromise healthcare access but could also hinder the viability of rural industries that depend on a stable local workforce, such as agriculture and energy.

Back to HCB News

U.S. Healthcare Homepage