More than 700 rural hospitals across the United States are at risk of closing, with nearly 300 considered at immediate risk because of severe financial challenges, according to a new analysis from the Center for Healthcare Quality and Payment Reform (CHQPR).

The report argues that inadequate payments from private health plans are the primary driver of hospital losses, contending that reimbursement from commercial insurers has a greater impact on financial stability than Medicare or Medicaid payments because privately insured patients account for roughly half of the services provided at the average rural hospital.

The report says more than 100 rural hospitals have closed during the past decade, leaving more than 3 million people without local access to emergency departments, inpatient care and other hospital services. Since the beginning of 2023, another 52 hospitals have eliminated inpatient services to qualify as Rural Emergency Hospitals, a federal designation that provides additional funding but requires facilities to discontinue inpatient care. CHQPR estimates that more than 13,000 patients previously received inpatient care annually at those hospitals.
According to the organization, about one-third of the nation's 2,250 rural hospitals are now at risk of closure, while 294 are at immediate risk. Kansas, Texas, Mississippi, Alabama and Oklahoma have the largest numbers of hospitals facing immediate financial danger.

CHQPR attributes the financial strain primarily to payment shortfalls rather than declining demand for services. More than 40% of rural hospitals lose money delivering patient care, the report says, citing higher costs associated with maintaining essential services in low-volume communities and reimbursement that often fails to cover those costs. The report also notes that pandemic-era federal assistance has ended, leaving nearly one-third of rural hospitals operating at an overall loss during 2024-25.

To reduce the risk of additional closures, CHQPR recommends requiring Medicare Advantage and commercial health plans to reimburse rural hospitals at levels that reflect the cost of providing care in small communities. It also proposes creating "standby capacity" payments to help support the fixed costs of maintaining emergency departments and other essential hospital services, even when patient volumes are low.

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