{ "study": { "slug": "hospital-distress-rural-access-2024", "title": "Rural hospital closures, by the numbers: which hospitals are most at risk", "standfirst": "Rural Critical Access Hospitals — the small facilities at the center of the closure crisis — run a 50.4% financial-distress rate, against 39.2% for urban hospitals, across 6,019 Medicare hospitals in the federal HCRIS cost reports. Their average operating margin is −8.93%, and 682 are losing money on patient care.", "desk": "financial-distress", "article_type": "Original Research", "published": "2026-06-11", "issue": 54, "doi": "10.5072/fonteum/hospital-distress-rural-access-2026", "url": "https://fonteum.com/research/hospital-distress-rural-access-2024", "methodology_version": "hospital-distress-rural/v1" }, "data_as_of": "2026-05-24", "datasets": [ { "slug": "cms-hospital-compare", "name": "CMS Hospital Compare", "publisher": "CMS — Hospital quality (Care Compare)", "upstream_url": null } ], "key_findings": [ { "number": "50.4%", "finding": "of rural Critical Access Hospitals are financially distressed (operating margin below −5%) — versus 39.2% of urban short-term hospitals", "dataset": "cms-hospital-compare" }, { "number": "−8.93%", "finding": "average operating margin across the 1,354 Critical Access Hospitals with a usable cost report — a structural operating loss, not a one-year dip", "dataset": "cms-hospital-compare" }, { "number": "682", "finding": "rural Critical Access Hospitals losing more than five cents on every patient-care dollar — the closure-risk core of the rural system", "dataset": "cms-hospital-compare" }, { "number": "40.9%", "finding": "of the 5,787 Medicare hospitals with a usable cost report are financially distressed (2,368 facilities); the national average operating margin is −13.84%", "dataset": "cms-hospital-compare" } ], "faqs": [ { "q": "Which hospitals are most at risk of closing?", "a": "Rural ones — specifically Critical Access Hospitals, the small federally designated rural facilities. In the HCRIS cost reports, 50.4% of them are financially distressed versus 39.2% of urban hospitals, and 682 of the 1,354 with a usable cost report post operating losses below the −5% threshold that rating agencies and MedPAC treat as a distress signal." }, { "q": "What is a Critical Access Hospital?", "a": "A federal Medicare designation for a small rural hospital: no more than 25 inpatient beds, located in a rural area, generally more than 35 miles from another hospital. Critical Access Hospitals are paid 101% of allowable costs rather than fixed prospective rates, precisely because their volumes are too low to survive standard payment." }, { "q": "Why do rural hospitals lose money?", "a": "Structural economics. Low patient volume spread across high fixed costs leaves little room to cover overhead, and rural payer mixes lean heavily on Medicare and Medicaid, which often pay below cost. The result is chronically negative operating margins — the financial pressure that precedes service cuts and, eventually, closure." }, { "q": "Does a negative operating margin mean a hospital will close?", "a": "No. Operating margin is a leading risk signal from a cost report that lags 12 to 18 months, not a prediction. Many hospitals run negative operating margins for years, sustained by investment income, philanthropy, tax support, or system transfers. Read the list as a standing-risk register, never as a closure forecast." }, { "q": "What is the Rural Emergency Hospital designation?", "a": "A Medicare provider type effective January 1, 2023, created as a closure-prevention pathway. An eligible rural or Critical Access Hospital can convert to emergency and outpatient services without acute inpatient care, receiving a monthly facility payment plus a 5% outpatient add-on — keeping emergency access open where a full hospital is no longer viable." }, { "q": "Can I reproduce these numbers?", "a": "Yes. Every figure is a direct aggregation over the 6,019-row hcris_facility_summary table from the 2026-05-24 HCRIS snapshot. Rural status comes from the CCN facility-type code, state from the CCN prefix, distress from the operating-margin field. The exact SQL is published in the reproducibility block below." } ], "citation": { "apa": "Fonteum Research. (2026, June 11). Rural hospital closures, by the numbers: which hospitals are most at risk. Fonteum Research, Issue 54. https://doi.org/10.5072/fonteum/hospital-distress-rural-access-2026", "url": "https://fonteum.com/research/hospital-distress-rural-access-2024" }, "reproducible_sql": "-- Hospital Financial Distress × Rural Access — fully reproducible query.\n--\n-- Source: CMS HCRIS Hospital Cost Reports (form CMS-2552-10), FY2024 vintage.\n-- Snapshot: cms-hcris-hospital-2552-10 / 2026-05-24\n-- Archive: https://downloads.cms.gov/FILES/HCRIS/HOSP10FY2024.ZIP\n-- SHA-256: e9552da36dcdcf904c5c4d35ffffe843af5b38afac196ac9db7db101bc8a96a0\n-- Table: public.hcris_facility_summary (public, read-only).\n--\n-- Distress threshold: operating_margin_pct < -5.0 (MedPAC / Moody's standard).\n-- Rural cut: the CCN facility-type code (positions 3-6). 1300-1399 = Critical\n-- Access Hospital; 0001-0879 = short-term acute. State = CCN positions 1-2\n-- (CMS/SSA state code).\nWITH c AS (\n SELECT\n operating_margin_pct AS om,\n substring(ccn FROM 3 FOR 4) AS fac4,\n left(ccn, 2) AS ssa\n FROM public.hcris_facility_summary\n WHERE operating_margin_pct IS NOT NULL\n),\ncls AS (\n SELECT\n om,\n (fac4 ~ '^[0-9]+$' AND fac4::int BETWEEN 1300 AND 1399) AS is_cah,\n (fac4 ~ '^[0-9]+$' AND fac4::int BETWEEN 1 AND 879) AS is_acute\n FROM c\n)\nSELECT\n count(*) AS hospitals_with_margin, -- 5,787\n round(avg(om), 2) AS avg_operating_margin, -- -13.84\n count(*) FILTER (WHERE om < -5) AS distressed_all, -- 2,368\n -- Rural Critical Access Hospitals:\n count(*) FILTER (WHERE is_cah) AS cah_total, -- 1,354 (w/ margin; 1,375 incl null)\n round(avg(om) FILTER (WHERE is_cah), 2) AS cah_avg_margin, -- -8.93\n count(*) FILTER (WHERE is_cah AND om < -5) AS cah_distressed, -- 682\n round(100.0 * count(*) FILTER (WHERE is_cah AND om < -5)\n / count(*) FILTER (WHERE is_cah), 1) AS cah_distress_pct, -- 50.4\n count(*) FILTER (WHERE is_cah AND om < -10) AS cah_under_neg10, -- 497\n -- Urban short-term acute, for contrast:\n round(100.0 * count(*) FILTER (WHERE is_acute AND om < -5)\n / count(*) FILTER (WHERE is_acute), 1) AS acute_distress_pct -- 39.2\nFROM cls;\n\n-- Median operating margin, rural vs urban:\n-- CAH median = -5.15 (already past the distress line)\n-- acute median = -1.04\n\n-- Distressed Critical Access Hospitals by state (CCN SSA prefix, top 5):\nSELECT\n left(ccn, 2) AS ssa_state_code,\n count(*) FILTER (\n WHERE substring(ccn FROM 3 FOR 4) ~ '^[0-9]+$'\n AND substring(ccn FROM 3 FOR 4)::int BETWEEN 1300 AND 1399\n AND operating_margin_pct < -5\n ) AS distressed_cah\nFROM public.hcris_facility_summary\nGROUP BY left(ccn, 2)\nORDER BY distressed_cah DESC\nLIMIT 5;\n-- 17 (Kansas) 76\n-- 45 (Texas) 70\n-- 28 (Nebraska) 32\n-- 27 (Montana) 29\n-- 24 (Minnesota) 29", "license": "U.S. Government Works (federal sources; 17 U.S.C. §105)", "generated_by": "Fonteum — https://fonteum.com", "notes": "Aggregate, source-traced figures frozen to the snapshot above. Reproduce by running reproducible_sql against the cited federal dataset; no per-entity records are included." }