Rural hospital struggles threaten access for 46 million

With financial pressures mounting on rural hospitals, tens of millions of Americans could find it harder to get the care they need.

A new American Hospital Association report finds that threats to rural hospitals could reduce access to care for more than 46 million Americans.

More than 40% of America’s rural hospitals are losing money, the report says. More than 150 rural hospitals have closed since 2010, and hundreds of other rural hospitals are considered to be at risk.

Steve Walsh, the new president and CEO of the American Hospital Association, says rural hospitals provide indispensable care to their communities.

“The pressures on rural providers are only intensifying and the warning signs have become impossible to ignore,” Walsh said in a statement. “Through urgent and collaborative policy action, we can protect patients in rural communities and ensure they continue to get the care they need close to home, when and where they need it most.”

• Read more: Rural health challenges demand attention

Rising pressures

Adding to the strain on rural hospitals, only a small number of patients are covered by commercial insurance.

Most of the rural hospital patient mix relies on Medicare and Medicaid for coverage. Nearly three-quarters (72%) of rural hospital discharges come from Medicare and Medicaid.

Medicare and Medicaid typically don’t cover the full costs of care, hospitals argue. Rural hospitals saw more than $7 billion in insufficient payments from Medicare in 2024, an increase of 20% since 2020, the AHA says.

Rural hospitals are also bracing for the impact of Medicaid cuts, with Medicaid spending projected to be cut by nearly $1 trillion over the next decade. Hospitals have said the Medicaid cuts could lead to some rural hospitals closing, or some at least scaling back services.

The federal government has launched the $50 billion Rural Health Transformation Program, a five-year initiative aimed to improve access to care in rural communities.

But as the association notes, planned cuts to Medicaid programs are estimated to reduce spending in rural communities by $137 billion, well above the size of the new rural health program, the AHA says.

Hospitals and health systems have been hoping for some assistance from the Rural Health Transformation Program, but states are using some of the money on primary care and community wellness programs.

Rural hospitals are also seeing more uninsured patients with the expirations of enhanced tax credits supporting the Affordable Care Act. The tax credits helped Americans pay for plans on the Health Insurance Marketplace, and many have dropped coverage due to spikes in premiums.

In 2026, the lapse of the tax credits is projected to lead to uncompensated care costs for rural hospitals increasing by more than 10%, and rural states are expected to see a 30% drop in residents covered under the marketplace, the AHA says.

With rural hospitals facing more financial troubles, many haven’t been able to keep up with maintenance of their facilities. About 4 in 10 rural hospitals are older facilities that need newer technology, the AHA says.

‘We have to address this’

Bill Gassen, president and CEO of Sanford Health, says rural hospitals need to be adequately supported. Based in Sioux Falls, South Dakota, Sanford Health operates 60 hospitals in the upper Midwest, with many based in rural communities.

Gassen tells Chief Healthcare Executive® that it’s important for policymakers to understand the role rural hospitals play in their communities.

“We may have some rural hospitals that maybe only have one or two patients per day that are staying there,” Gassen says. “But when crisis hits, as we saw just a few years ago, those small rural hospitals played an essential role in our ability to care for our communities.”

It’s time for a broader conversation about the need for care and preparedness needed in rural communities, Gassen says.

At the local level, Gassen sees the need for more robust conversations about what care must be prioritized in certain communities, including preserving emergency services or labor and delivery services as appropriate.

“Those conversations are unique to each community. But you have to be fully engaged to have that conversation,” he says.

But Gassen says it’s clear that rural hospitals are going to need support.

“More than 20% of the U.S. population lives in rural communities, so we believe we have to address this,” Gassen says. “We cannot afford to have all those hospitals fail.”