Hailey Tran
Rural hospitals in the United States are facing a crisis, with many closing down or at risk of closure due to financial difficulties. From 2005 to 2023, 146 rural hospitals closed or stopped providing inpatient services, with 81 shutting down completely. Financial stress, smaller size, lower occupancy rates, and greater vulnerability to economic fluctuations are the primary drivers of these closures. In addition, rural hospitals often struggle to maintain essential healthcare services and lose money on critical service lines such as behavioral health, pulmonology, obstetrics, and burns and wounds. According to a recent analysis, nearly 800 rural hospitals are at risk of closure, with about 40% in immediate danger. This crisis has severe implications for access to healthcare for millions of Americans, with many facing long journeys to reach alternative hospitals.
| Characteristics | Values |
|---|---|
| Number of rural hospitals at risk of closure | 760 |
| Number of rural hospitals at immediate risk of closure | 314 |
| Percentage of rural hospitals at immediate risk of closure | 40% |
| Number of rural hospitals at risk of closure in Idaho | 8 |
| Number of rural hospitals at immediate risk of closure in Idaho | 1 |
| Number of rural hospitals at risk of closure in Illinois | 17 |
| Number of rural hospitals at immediate risk of closure in Illinois | 9 |
| ... | ... |
| Number of rural hospitals closed or stopped providing inpatient services from 2005 to 2023 | 146 |
| Number of rural hospitals that shut down completely from 2005 to 2023 | 81 |
| Number of rural hospitals that closed their doors or were unable to continue providing inpatient services over the past 10 years | 92 |
| Number of rural hospitals closed in the past two decades | Nearly 200 |
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What You'll Learn
- Between 2005 and 2023, 146 rural hospitals closed or stopped providing inpatient services
- Financial stress is the primary driver of rural hospital closures
- Nearly 800 rural US hospitals are at risk of closure due to financial problems
- Over 100 rural hospitals have stopped delivering babies in the past 5 years
- A converted closure occurs when a hospital ceases to provide inpatient services but continues to provide some healthcare services
Between 2005 and 2023, 146 rural hospitals closed or stopped providing inpatient services
Between 2005 and 2023, 146 rural hospitals in the United States closed or were converted to non-acute care facilities, meaning they stopped providing general, short-term, acute inpatient care. Of these 146 hospitals, 81 shut down completely. The remaining hospitals underwent a "conversion," meaning they stopped offering inpatient services but continued to provide other healthcare services such as primary, outpatient, or emergency care.
Rural hospitals often face financial difficulties, which is the primary driver of closures. Smaller size, lower occupancy rates, and greater vulnerability to economic fluctuations than urban hospitals contribute to their financial stress. In addition, payments from health insurance plans are often inadequate to sustain essential services in these communities. As a result, many rural hospitals are at risk of closing or have already eliminated certain services.
According to a June 2025 analysis, nearly 800 rural hospitals in the United States are at risk of closure due to financial problems, with about 40% facing an immediate threat. This analysis identifies two tiers of rural hospital vulnerability: those at risk of closure within six to seven years and those facing an immediate risk of closure within two to three years.
The impact of rural hospital closures or reduction in services can be significant for the communities they serve. For example, over 100 rural hospitals have stopped delivering babies over the past five years, and less than half still offer labor and delivery services. This means that millions of Americans must travel long distances to access healthcare services, even if they have insurance to pay for them.
To support rural hospitals and address the financial challenges they face, the Federal Government has provided financial assistance through programs such as the USDA's Community Facilities Program. These efforts aim to ensure continued access to essential healthcare services for people living in rural communities.
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Financial stress is the primary driver of rural hospital closures
Rural hospitals are often plagued by low patient volumes due to the lower population densities in the areas they serve. This limits their ability to "risk pool", balancing the costs of treating healthier and less healthy patients. Additionally, rural populations tend to be older and less healthy, increasing healthcare costs. The combination of lower patient volumes and higher healthcare costs strains the financial stability of rural hospitals.
Low reimbursement rates from Medicare and Medicaid further contribute to the financial strain on rural hospitals. To address this issue, the Center for Medicare and Medicaid Services has implemented programs such as the "Medicare Dependent Hospitals" initiative. Hospitals located in rural areas with less than a hundred beds and a high proportion of inpatient days or discharges for Medicare beneficiaries can be designated as "Medicare Dependent Hospitals". This designation provides financial advantages in the reimbursement system, helping to improve hospital financing and prevent closures.
Another factor impacting the financial health of rural hospitals is staffing shortages. To address this challenge, programs like the Georgia Physicians for Rural Areas Assistance Program's Donations for Rural Hospitals have been established. This initiative assists in paying off debt for practitioners who work full-time in underserved rural counties, helping to alleviate the financial burden on hospitals.
The financial stress experienced by rural hospitals has led to a crisis in rural health. The federal government has recognized the severity of this issue and provides financial support through various programs. One notable example is the USDA's Community Facilities Program, which offers financial assistance to rural hospitals. These efforts aim to prevent closures and improve health outcomes for rural communities.
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Nearly 800 rural US hospitals are at risk of closure due to financial problems
Nearly 800 rural hospitals in the United States are at risk of closure due to financial difficulties, with around 40% facing an immediate threat of closure. This means that over 700 rural hospitals, or one-third of all rural hospitals in the country, are in danger of closing down in the near future. This is according to the Center for Healthcare Quality and Payment Reform's most recent analysis, which is based on hospitals' latest cost reports submitted to CMS and verified as current through June 2025.
The analysis identifies two distinct tiers of rural hospital vulnerability. The first tier includes hospitals at risk of closure, which is measured by financial reserves that can cover losses on patient services for only six to seven years. Nearly every state falls into this category, with over 25% of rural hospitals in more than half of the states facing this risk. Additionally, 11 states have a majority of their rural hospitals in jeopardy.
The second tier comprises hospitals facing an immediate risk of closure, with financial reserves that can offset losses on patient services for just two to three years at most. This includes states such as Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, and Maryland, with the percentage of hospitals at immediate risk ranging from 2% to 29%.
The financial struggles of rural hospitals are not a new issue. Over the past two decades, nearly 200 rural hospitals have closed, and the situation continues to deteriorate. One of the primary causes is the inadequacy of payments from health insurance plans, which are insufficient to sustain essential services in rural communities. Federal programs have thus far failed to address the challenges faced by small rural hospitals, and some proposed changes could potentially exacerbate the problems.
To prevent further closures and ensure access to healthcare services in rural areas, it is imperative that rural hospitals receive both adequate payments and an improved payment system. Additionally, organizations like HRSA provide support to rural hospitals through various programs and initiatives. These include the Medicare Rural Hospital Flexibility (Flex) Program, which funds states to support Critical Access Hospitals (CAHs), and the Targeted Technical Assistance for Rural Hospitals Program (TTAP), which helps maintain access to essential healthcare services in rural areas.
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Over 100 rural hospitals have stopped delivering babies in the past 5 years
Over the past five years, more than 100 rural hospitals have closed their labor and delivery units, with more expected to follow suit. This means that less than half of America's rural hospitals still have labor and delivery units, with only 42% delivering babies. A report by the Center for Healthcare Quality & Payment Reform suggests that more than 130 rural hospitals with labor and delivery units have lost money in the last two years.
The high number of closures is due to the high costs of running these units, with rural providers needing to cut their services to stay afloat. In addition, a decline in birth rates has contributed to the financial pressures on these hospitals. As a result, hospital leaders are concerned about maintaining safety standards for their limited deliveries.
The closures have disproportionately affected certain states, with California seeing 50 labor and delivery units close over the past decade. In 10 states, less than one-third of rural hospitals are still delivering babies. Oregon is another state where hospitals are struggling, with many barely covering expenses or losing money.
The implications of these closures are significant, as they limit access to care for mothers and pregnant women in rural areas. This is particularly concerning given the higher likelihood of serious complications for women giving birth in rural hospitals that handle fewer births annually. While some advocate for improving training and coordination among rural health providers, others emphasize the need for access to women's healthcare services beyond just delivery.
To address these challenges, organizations like HRSA (Health Resources and Services Administration) offer various programs and grants to support rural hospitals. These include the Medicare Rural Hospital Flexibility (Flex) Program, which funds states to provide support to Critical Access Hospitals, and the Targeted Technical Assistance for Rural Hospitals Program (TTAP), which helps ensure continued access to essential healthcare services in rural areas. Despite these efforts, nearly 800 rural hospitals across the U.S. are still at risk of closure due to financial difficulties, highlighting the ongoing struggle to maintain healthcare services in these communities.
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A converted closure occurs when a hospital ceases to provide inpatient services but continues to provide some healthcare services
According to a 2025 analysis by the Center for Healthcare Quality and Payment Reform, nearly 800 rural hospitals in the United States are at risk of closure due to financial difficulties, with about 40% of those hospitals at immediate risk. This analysis identifies two tiers of rural hospital vulnerability: those at risk of closure and those facing an immediate risk of closure.
Converted closures are distinct from complete closures, where a hospital ceases to provide any healthcare services. Since January 2005, there have been 196 rural hospital closures and conversions, with 112 complete closures and 84 converted closures. From 2005 to 2023, 146 rural hospitals in the United States closed or were converted to non-acute care, with 81 shutting down entirely and the rest undergoing conversion.
The rapid succession of hospital closures in the 1980s and 1990s led to the creation of Critical Access Hospitals (CAHs), which accept certain restrictions and receive 101% reimbursement for Medicare costs. As of August 2004, 959 small rural hospitals (over 40% of all rural hospitals) had opted for CAH status.
The closure of rural hospitals can have significant negative economic effects on communities, reducing access to healthcare and potentially discouraging retirees and businesses from moving into the area.
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Frequently asked questions
146 rural hospitals have closed or stopped providing inpatient services from 2005 to 2023.
760 rural hospitals are at risk of closure due to financial problems, with 314 facing an immediate risk of closure in the next 2 to 3 years.
92 rural hospitals have closed their doors or been unable to continue providing inpatient services over the past 10 years.
Nearly 200 rural hospitals have closed over the past two decades.
