Research Alert: June 25, 2024

New Research on Rural Hospital Profitability from 2018 to 2023

Profitability of rural hospitals in 2020-21 and 2021-22 was influenced by the Public Health Emergency (PHE) funding distributed during the COVID-19 pandemic. The following briefs examine hospital profitability from 2018 to 2023, taking PHE funding into account.

2018‐23 Profitability of Rural and Urban Hospitals by Medicare Payment Designation

Key Findings:

• Median profitability of both rural and urban hospitals increased over the first four periods (except for a small downturn of urban hospitals in 2020-21), but there was a large decrease in profitability of both rural and urban hospitals in 2022-23.
• Median profitability of rural hospitals was less than urban hospitals in 2018-19 and 2019-20, but higher than urban hospitals in 2020-21, 2021-22, and 2022-23.
• In the last period (2022-23), the highest median profitability was urban Prospective Payment System (PPS) hospitals with 25 or fewer beds (PPS <26), and the lowest was rural Rural Referral Centers (RRCs).
• In 2022-23, median profitability of Critical Access Hospitals (CAHs), PPS <26, PPS 26-50, Medicare Dependent Hospitals, and RRCs in rural locations was lower than the same types of hospitals in urban locations. Median profitability of PPS >50 and Sole Community Hospitals in rural locations was higher than the same types of hospitals in urban locations.

2018-23 Profitability of Rural Hospitals by Ownership and System Affiliation

Key Findings:

• Rural hospitals with system affiliation had a higher median total margin than those without a system affiliation in every period except 2021-22. Median profitability of rural hospitals both with and without system affiliation increased over the first four periods, but there was a large decrease in profitability of both in 2022-23.
• For three of the five study periods, the median total margin was highest among for-profit hospitals and lowest among government-owned hospitals. Median profitability of all ownership types increased over the first four periods, but there was a large decrease in profitability among all three types in 2022-23.

2018-23 Profitability of Rural Hospitals by With and Without Rural Health Clinics and Long-Term Care

Key Findings:

• Rural hospitals that did not provide long-term care had a higher median total margin than those that provided long-term care in every period except 2018-19. Median profitability of rural hospitals that provided and did not provide long-term care increased over the first four time periods, but there was a large decrease in profitability of both in 2022-23.
• Rural hospitals that did not operate Rural Health Clinics (RHCs) had a higher median total margin than those that operated RHCs in the first three periods, but a lower total margin in the last two periods. Median profitability of rural hospitals that operated and did not operate RHCs increased over the four periods, but there was a large decrease in profitability of both in 2022-23.

Additional Resources of Interest:

• More information about the North Carolina Rural Health Research and Policy Analysis Center
• More information about the Rapid Response to Requests for Rural Data Analysis
• More information from the Rural Health Information Hub's topic guide: Hospitals