In 2016, the NC Rural Health Research Program developed and utilized the Financial Distress Index (FDI) model to identify hospitals at high risk of financial distress and assess trends in varying risk of financial distress over time to help inform strategies to prevent or mitigate the effects of closures. We found the proportion of rural hospitals predicted to be at high risk of financial distress increased over time, with the largest increases in the South and Northeast census regions, and for Medicare Dependent Hospitals (MDH) and Rural Referral Centers (RRC). The purpose of this brief, Trends in Risk of Financial Distress among Rural Hospitals from 2015 to 2019, is to use updated results from the FDI to describe the trends in risk of financial distress among rural hospitals, by census region and by Medicare reimbursement type from 2015 to 2019.
The FDI model assigns rural hospitals to high, mid-high, mid-low or low risk levels for a given year using Medicare cost report and Neilsen-Claritas data summed to market areas from two previous years. Using data from 2013-2017, this brief, Trends in Risk of Financial Distress among Rural Hospitals, 2015 to 2019, updates and describes the distribution and trends in the risk of financial distress among rural hospitals for the 2015-2019 period by census region and Medicare payment classification.
The proportion of rural hospitals predicted to be at high risk of financial distress has increased from 7.1% in 2015 to 9.2% in 2019. This proportion also varies by census region, with the South census region having the largest percentage of rural hospitals predicted to be at high risk of financial distress in years 2015 to 2019. Prospective Payment System hospitals have surpassed Medicare Dependent Hospitals with the highest proportion of hospitals in financial distress, climbing 7.2 percentage points since 2015.