Average Salary Expense in Rural and Urban Hospitals Before and During the Low Wage Index Policy, 2018–2022
Rural hospitals face persistent workforce shortages and limited financial flexibility, making labor costs a critical component of their economic sustainability. Labor expenses increased substantially during the COVID‑19 pandemic, although the magnitude of these changes varied across geographic and policy contexts. This brief, Average Salary Expense in Rural and Urban Hospitals Before and During the Low Wage Index Policy, 2018–2022 examines geographic variation in average salary expense per full‑time equivalent (FTE) employee among rural hospitals nationwide between 2018 and 2022, with a focus on differences before and during the COVID‑19 pandemic.
Using data from the Centers for Medicare & Medicaid Services’ Healthcare Cost Report Information System, we analyzed median average salary expense per FTE for Critical Access Hospitals and rural Prospective Payment System hospitals. Salary expenses were compared across states, U.S. Census regions, Medicaid expansion status, Core‑Based Statistical Areas, and Frontier and Remote Area codes. Percentage changes were calculated between pre‑pandemic years (2018–2019) and pandemic years (2021–2022).
Nationally, median average salary expense per FTE increased by approximately 15 percent over the study period. However, changes varied widely by geography. Salary growth was lowest in the West and highest in the South, while considerable variation was observed at the state level. In 2022, median salary expense per FTE was highest in northeastern and western states and lowest in southern states. Rural hospitals in Medicaid expansion states experienced larger increases in salary expense than those in non‑expansion states. Differences were also observed by rurality and remoteness, reflecting variation in local labor markets and access to workforce supply.
These findings highlight substantial geographic variation in rural hospital salary expenses and growth trends during a period of significant system disruption. Understanding where salary pressures are greatest can help inform future research on workforce stability, financial resilience, and policy strategies to support rural hospitals.