Throughout the U.S., as many as 760 rural hospitals are vulnerable to closure due to serious financial problems, and 314 of these rural hospitals are at immediate risk of closure due to the severity of financial problems, according to a report by the Center for Healthcare Quality and Payment Reform (CHQPR). The loss of a rural hospital can trigger a downward spiral of economic hardship and community health status, according to the report. The rural hospitals at risk of closure represent about one-third of all rural hospitals in the United States. 

In the past 10 years, 108 rural hospitals have closed, the report stated. Another 40 converted to an operating model that does not provide inpatient care (e.g., Rural Emergency Hospital). The states with the greatest loss of inpatient care facilities since 2015 are Texas (18 complete closures or inpatient service closures), Tennessee (13), and Kansas (11).

• Of the 48 states with rural hospitals, 45 have at least one vulnerable rural hospital, with Texas (87), Kansas (66), and Oklahoma (47) having the most rural hospitals at risk of closing.
• States with the most rural hospitals at immediate risk of closure due to financial issues include Kansas (29), Oklahoma (23), and Alabama (23). 

Financial issues that affect these rural hospitals include losses on consumer services due to insurance payments that are lower than the cost of care, insufficient revenues from other sources to offset losses, and low financial reserves. The researchers determined that the primary cause of financial problems at most small rural hospitals is inadequate service payments from private health plans. Overall, it costs more to provide services in rural areas than urban areas. While urban hospitals can make profits on service payments from private health plans, rural hospitals often lose money due to payer reimbursement rates that are less than the cost of delivering services. Without changes to ensure that insurance payments cover service costs, closure will continue to be an issue for rural hospitals. 

Researchers from CHQPR analyzed data from the Centers for Medicare and Medicaid Services (CMS), hospital cost reports, and data from the Cecil G. Sheps Center for Health Services Research through June of 2025. They looked at historical hospital closures since 2015, inpatient service closures, open rural inpatient hospitals, hospitals with losses on services, hospitals at risk of closure, and hospitals at immediate risk for closure. 

The researchers stated that about half of all services delivered by an average rural hospital are for people with private health insurance, which includes employer-sponsored plans and Medicare Advantage plans. They said that solutions focused on increasing traditional Medicare or Medicaid payments, or expanding Medicaid eligibility to reduce the number of uninsured consumers, are based on a mistaken belief that a majority of rural consumers are enrolled in traditional Medicare or are eligible for Medicaid. The researchers said that in most cases, it is the amounts paid by private insurance that determine whether a rural hospital loses money.  

The full text of Rural Hospitals At Risk Of Closing was published on July 7, 2025, by the Center for Healthcare Quality and Payment Reform. A free copy is available (accessed July 17, 2025). 

For more information, contact: Harold Miller, President and Chief Executive Officer, Center for Healthcare Quality and Payment Reform, 320 Fort Duquesne Boulevard, Suite 20-J, Pittsburgh, Pennsylvania 15222; 412-803-3650; Email: RuralHospitals@CHQPR.org; Website: https://chqpr.org/  

August 2025     00US25EUA0023