2018-23 Profitability of Rural Hospitals by Ownership and System Affiliation
Access to care in many communities has been reduced by rural hospital closures. The causes of rural hospital closures are complex and multifaceted, but unprofitability has been identified as a major contributor. In this study, the NC Rural Health Research Program focuses on system affiliation and ownership as additional contributing factors. Using hospital cost report data from the Centers for Medicare & Medicaid Services (CMS), we compared total margin by system affiliation (yes/no) and ownership (government, not-for-profit, and for profit) for the years 2018-2023. In a previous study, we discuss how timing differences in hospital recognition of PHE revenue versus PHE expenses on Medicare cost reports could distort reported profitability in 2020 and 2021. For this reason, in this study we considered it important to clearly separate study years without PHE funds (before COVID-19 years) and study years with PHE funds (after COVID-19 years). Therefore, we looked at profitability over a five-year period consisting of two years before and three years after COVID-19. Taking into account Public Health Emergency funds received during the pandemic, we found:
- Rural hospitals with system affiliation had a higher median total margin than those without a system affiliation in every period except 2021-22. Median profitability of rural hospitals both with and without system affiliation increased over the first four periods, but there was a large decrease in profitability of both in 2022-23.
- For three of the five study periods, the median total margin was highest among for-profit hospitals and lowest among government-owned hospitals. Median profitability of all ownership types increased over the first four periods, but there was a large decrease in profitability among all three types in 2022-23.
- Profitability of rural hospitals in 2020-21 and 2021-22 was influenced by Public Health Emergency (PHE) funding distributed during the COVID-19 pandemic.
To read the brief, download: 2018-23 Profitability of Rural Hospitals with by System Affiliation and Ownership