Using a recent revision of the Financial Distress Index (FDI) model, this study aimed to describe the relative risk of experiencing financial distress for rural hospitals and selected urban hospitals (urban Critical Access Hospitals [CAHs], urban Medicare Dependent Hospitals [MDHs], and urban Sole Community Hospitals [SCHs] earning $500,000,000 or less in net patient revenue).

Key Findings:

• Among 2,063 rural hospitals and selected urban hospitals with a Medicare special payment designation in 2021, 72 (3.5%) were predicted to be at highest relative risk of financial distress in 2023, 294 (14.3%) at mid-highest risk, 638 (30.9%) at mid-lowest risk, and 1,059 (51.3%) at lowest risk.
• Over 60% of hospitals at highest relative risk of financial distress are in seven states: Texas (9 hospitals at highest relative risk), Oklahoma (8), Tennessee (8), Alabama (6), Kansas (5), Mississippi (5), and Georgia (4).
• Compared to the full sample of rural hospitals and urban hospitals with a special payment designation, hospitals at highest relative risk of financial distress are more likely to be Prospective Payment System-only hospitals, MDHs, and for-profit hospitals. In contrast, hospitals at highest relative risk of financial distress are less likely to be CAHs, Rural Referral Centers, and nonprofit hospitals.