Rural Health
Research Gateway

Research Alert: April 29, 2026

New Research on Geographic Variation in Average Salary Expense and Medicare Wage Index Trends

Geographic Variation in Average Salary Expense Among Rural Hospitals Nationwide, 2018–2022

This brief examines how wages changed at rural hospitals from 2018–2019 to 2021–2022, focusing on geographic differences among Critical Access Hospitals (CAHs) and rural Prospective Payment System (PPS) hospitals. By tracking salary expense per full-time equivalent (FTE) employee, it highlights the workforce and financial pressures rural hospitals faced as COVID disrupted care delivery and labor markets.

Key Findings:

  • Census region: Salary growth was lowest in the West (11.98%) and highest in the South (21.77%). In 2022, average salary expense per FTE in 2022 was highest in the West ($80,578) and lowest in the South ($67,726).
  • State: Oregon had the lowest growth (2.05%), while Georgia had the highest (24.76%). In 2022, Mississippi had the lowest average salary expense per FTE ($60,713), and Connecticut had the highest ($92,064).
  • Medicaid expansion status: Non-expansion states saw lower salary growth (16.4%) than expansion states (20.8%). In 2022, non-expansion states also had lower average salary expense per FTE ($68,084 vs. $74,549).
  • Core Based Statistical Area (CBSA): Growth was lowest in micropolitan areas and highest in metropolitan areas. In 2022, non-core areas had lower average salary expense per FTE ($69,133) than metropolitan ($75,471) and micropolitan ($75,399) areas.
  • Frontier and Remote Area (FAR) code: Growth was lowest in area 2 (11.28%) and highest in area 4 (23.46%). In 2022, area 3 had the highest average salary expense per FTE ($77,075).

Medicare Wage Index Trends in Rural and Urban Hospitals Before and During the Low Wage Index Policy, 2018–2022

This study tracks how Medicare wage index values changed for rural and urban Prospective Payment System (PPS) hospitals from 2018–2022. It shows how these values shifted over time and explains how policy and labor market forces may be driving geographic differences in hospital payment. The Low Wage Index Policy (LWIP), implemented in FY 2020, aimed to increase the wage index for hospitals in the lowest quartile by raising their wage index values toward the 25th percentile.

Key Findings:

  • For most hospitals, there was little change in wage index values over the five-year period but for the hospitals with low wage indexes, there was a considerable increase. Rural PPS hospitals experienced increases in median and mean wage index values, while urban PPS hospitals saw small decreases.
  • LWIP produced the expected distribution of effects by raising the minimum and reducing the maximum wage index values. During LWIP implementation, the minimum wage index increased, and the maximum decreased for both rural PPS and urban PPS hospitals, consistent with the policy's design and budget neutrality requirements.
  • Variation in wage index values was greater among urban hospitals than rural hospitals. Rural PPS hospitals consistently demonstrated a smaller interquartile range than urban PPS, indicating less variation across rural labor markets compared to the wider wage index distribution among urban hospitals.
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: