Research Alert: March 29, 2022

Rural Hospital Profitability During the Global COVID-19 Pandemic Requires Careful Interpretation

This findings brief describes the pre-pandemic (2011-19) trend of rural hospital profitability and explains why possible increases in reported profitability during the pandemic (2020-21) may mask the long-term financial challenges of rural hospitals.

  • In the nine years before the COVID-19 pandemic began (2011-19), the median total margin of rural hospitals was on a downward trajectory, ranging between 1.5% and 3.1%, and the percentage with a negative total margin was increasing.
  • In 2020, rural hospitals and urban Inpatient Prospective Payment System (IPPS) hospitals reported receiving over $32 billion in federal support, primarily from the Provider Relief Fund (PRF), to compensate for loss of revenue and increased expenses from the pandemic.
  • The PRF and Paycheck Protection Program (PPP) funds and timing differences in reporting could temporarily distort reported profitability measures and conceal the long-term financial challenges facing rural hospitals.

PRF and PPP funds were an important financial lifeline for many rural hospitals. However, the PRF and PPP funds are temporary and will be fully distributed at some point in 2022. Unless Congress authorizes additional funding, we expect rural hospitals to return to pre-pandemic levels of profitability.

Contact Information:

George H. Pink, PhD
North Carolina Rural Health Research and Policy Analysis Center
Phone: 919.843.2728

Additional Resources of Interest: