2012-14 Profitability of Urban and Rural Hospitals by Medicare Payment Classification
OVERVIEW
More Americans are now aware of the financial challenges faced by rural hospitals. Media coverage of the 66 rural hospital closures between January 2010 and January 2016 has highlighted the health care access and economic challenges facing rural America. Rural hospital closures are not a new phenomenon – hundreds of rural hospitals closed in the 1980s and 1990s.1 Recognizing that many rural hospitals are the only health care facility in their community and that their survival is vital to ensure access to health care, federal policymakers created four classifications of rural hospitals that qualify for special payment provisions under Medicare: Critical Access Hospitals (CAHs), Medicare Dependent Hospitals (MDHs), Sole Community Hospitals (SCHs), and Rural Referral Centers (RRCs). This study compares the fiscal years (FY) 2012-2014 profitability of urban hospitals to that of rural hospitals. Rural hospitals are further divided by “size” of rural Prospective Payment System hospitals (R-PPS <26 beds, 26-50 beds, and >50 beds) and by the four rural Medicare payment classifications (CAH, MDH, SCH, and RRC) despite the urban location of some.