Rural hospitals have long faced financial hardships, and their difficulties began well before the COVID-19 pandemic, analysts say.
Small, rural hospitals typically have more difficulty attracting top talent, and that goes beyond physicians and nurses. Many rural patients are covered by Medicare, so rural hospitals get less revenue than facilities with a higher share of patients with commercial insurance. Even in better times, rural hospitals typically generated enough money to cover expenses, and not much more.
But analysts are saying the outlook for many rural hospitals is grim. Many of these invaluable institutions could disappear in the near future, endangering the health of rural communities nationwide. About 60 million people, roughly one in five Americans, live in rural communities, according to the Census Bureau.
Kevin Holloran, a senior director at Fitch Ratings who analyzes the hospital industry, offered a grim assessment of rural hospitals during a webinar last week. He’s hardly a pessimist when it comes to the outlook of nonprofit hospitals, but when it comes to rural hospitals, the warning signs can’t be ignored.
“I think a lot of rural healthcare is in for a very rough ride, and we should expect to see closures in some of those critical access hospitals,” Holloran said.
Holloran points to the demographics lining up against rural hospitals.
Many are based in small communities with stagnant or declining populations, and they don’t have a large enough pool of people to fill jobs. With the population of rural communities aging, the payer mix gets even less favorable for rural hospitals, with even more patients on Medicare.
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