Rural Health
Research Gateway

Research Alert: April 28, 2026

New Research on Hospital Wages Measured as Average Salary Expense per FTE

Average Salary Expense in Rural and Urban Hospitals in 2022 Compared With 2018, by Hospital Characteristics

This study compares labor costs at rural and urban hospitals before COVID and examines whether pay grew differently across hospitals. It identifies hospital characteristics linked to staffing costs and what they reveal about financial resilience during unexpected disruption.

Key Findings:

The study compares median wages for rural hospitals and urban hospitals from 2017–2018 (pre‑COVID) to 2021–2022 (post‑COVID) to assess how the pandemic may have affected rural–urban wage disparities.

The median average salary expense per full-time equivalent (FTE):

  • Was uniformly higher in urban areas than rural hospitals across all categories of net patient revenue, system affiliation, hospital ownership, and number of acute care beds.
  • Was higher for hospitals with higher net patient revenue, system affiliation, or not-for-profit status.

The 2018-22 percentage change in median average salary expense per FTE:

  • Was generally higher in rural (vs. urban) hospitals and system-affiliated (vs. independent).
  • Was highest among hospitals with 51-100 beds (vs. larger and smaller).
  • Was not particularly associated with net patient revenue; the smallest rural hospitals saw the largest increase, and the smallest urban hospitals saw the smallest increase.

While urban hospitals consistently had higher median average salary expenses per FTE across all categories, rural hospitals experienced a greater percentage increase in salary expenses from 2018-2022, which is likely due to greater staffing challenges and pressure to stay competitive in the health care workforce.

Average Salary Expense in Rural and Urban Hospitals Before and During the Low Wage Index Policy, 2018–2022

This study describes hospital wage patterns for Critical Access Hospitals (CAHs), rural Prospective Payment System (PPS) hospitals, and urban PPS hospitals from 2018–2022. The Low Wage Index Policy (LWIP) in effect between 2020-22 aimed to increase the wage index for hospitals in the lowest quartile, effectively raising their Medicare payments. This was intended to help these hospitals increase their employee wages.

Key Findings:

  • Hospital wages increased steadily across all hospital types between 2018 and 2022. Median average salary expense per full-time equivalent (FTE) employee rose each year for CAHs, rural PPS, and urban PPS hospitals, with the largest annual increases occurring in the later years of the study period.
  • Urban hospitals consistently paid higher wages, and rural-urban wage differences remained stable. Despite rising wages overall, urban PPS hospitals maintained substantially and persistently higher wages than rural PPS hospitals and CAHs, with wage gaps remaining relatively unchanged across the five-year period examined.
  • Multiple economic and policy pressures likely contributed to rising wages. Workforce shortages, increased reliance on contract labor, COVID-19-related disruptions, and policies such as the LWIP have created a complex operating environment; however, the study data do not allow for attribution of wage changes to specific causes.
Contact Information:

George H. Pink, PhD
North Carolina Rural Health Research and Policy Analysis Center
Phone: 919.966.5011
gpink@email.unc.edu

Additional Resources of Interest: