To remain open, businesses generally need to be profitable (have revenues greater than expenses). Hospitals are no different. Hospitals use profits to pay for new and upgraded buildings, equipment, technology, programs, and other patient care needs. To assess hospital profitability, we often look at total margin. Total margin measures the control of expenses relative to revenues, and expresses the profit a hospital makes as a proportion of revenue brought in.
In the brief, Rural Hospitals with Long‐term Unprofitability, the North Carolina Rural Health Research Program examines characteristics of rural hospitals that had a negative total margin in 2016 and 2017 and 2018. We examined net patient revenue, Medicare payment classification, region, and state for rural hospitals that had negative total margins for three years in a row. We found 311 hospitals out of 2,453 rural hospitals had a negative total margin in 2016 and 2017 and 2018. Among these hospitals, the majority: had $0‐25 million in net patient revenue; were Critical Access Hospitals (CAHs); and were in the South and Midwest census regions. In addition, the states with the greatest number of rural hospitals that had a negative total margin in 2016 and 2017 and 2018 were Kansas (39), Mississippi (22), Alabama (17), Oklahoma (17), and Texas (15). Rural hospitals with long-term unprofitability are at higher risk for financial distress and potential closure.
Other briefs in this series include: