Developing a Post-COVID Financial Distress Index

Lead researcher:
Research staff:
Project funded:
September 2022
Project completed:
April 2024

The Financial Distress Index (FDI) model was originally developed using financial and community data for rural hospitals from 2000 through 2013. Use of the FDI has been suspended temporarily because of extraordinary financial circumstances during COVID and because of challenges with the hospital market file mentioned in the project, Alternative Methods for Defining Rural Hospital Service Area Market. This project refined and updated the FDI to improve its ability to detect distress as rural hospitals reset after the pandemic.

This project:

  1. Identified, tested, and incorporated new variables that could improve the prediction ability of the FDI model. Examples of potential improvements include use of more and recent hospital closure data, a recently adopted measure of system affiliation, and a new measure of markets.
  2. Investigated potential use of new, more complex analytical methods that may provide greater predictive power or more nuanced risk categories.

Rural hospital profitability continues to be a challenge and having an index that can help us accurately predict financial distress and potential closure helps programs and policymakers better target resources to prevent closure or convert to other models of care (e.g., Rural Emergency Hospitals).