Research Alert: March 28, 2018

Geographic Variation in the 2016 Profitability of Urban and Rural Hospitals

Rural hospital closures remain a worrisome issue for policy makers and communities: between 2010 and 2017, 83 rural hospitals closed. The North Carolina Rural Health Research Program tracks these closures and studies potential predictors. Profitability is not the only predictor, but it is one of the main predictors of hospital closure. Researchers and policy makers are trying to better understand the factors associated with a closure and how to develop sustainable healthcare models for communities that lose their hospitals.

To help policy makers, researchers, and communities understand which hospitals are likely to be less profitable, this study describes the geographic variation in 2016 profitability of Critical Access Hospitals (CAHs), other rural hospitals (ORHs) [Medicare Dependent Hospitals, Sole Community Hospitals, and rural Prospective Payment System (PPS) hospitals], and urban PPS hospitals by census region, census division, and state.

In sum, we found that across the nation, the majority of unprofitable hospitals were rural hospitals, with urban hospitals being twice as profitable. While there was substantial variation in hospital profitability across states, the greatest number of unprofitable hospitals were ORHs in the South, urban hospitals in the South, and CAHs in the Midwest. The least profitable hospitals were ORHs in the Northeast and CAHs in the South.

Additional Resources of Interest:

• 2012-14 Profitability of Urban and Rural Hospitals by Medicare Payment Classification
• Change in Profitability and Financial Distress of Critical Access Hospitals From Loss of Cost-Based Reimbursement
• Effect of Surgery on the Profitability of Rural Hospitals
• Geographic Variation in the Profitability of Critical Access Hospitals
• Geographic Variation in the Profitability of Urban and Rural Hospitals
• Profitability of Rural Hospitals
• More information about the North Carolina Rural Health Research and Policy Analysis Center
• More information from the Rural Health Information Hub's topic guide: Hospitals