Using the FDI to Predict Likelihood of Specific Service Line Outcomes

Rural hospitals operate under unique financial pressures, including high fixed costs, low patient volumes, limited revenue from specialized services, and thin operating margins. These challenges make rural hospitals particularly vulnerable not only to full closures but also to reductions in critical service lines, such as obstetrics, behavioral health, hospice, and surgical care. Service line reductions can increase travel times, limit access to essential care, disrupt local workforces, and exacerbate health disparities in rural communities. Between 2005 and 2025, 195 rural hospitals closed, and 42 converted to Rural Emergency Hospitals, underscoring the vulnerability of rural health infrastructure.

The North Carolina Rural Health Research Program developed the Financial Distress Index (FDI) to assess the relative risk of financial distress and closure among rural hospitals. Although prior work has focused on predicting full hospital closures, the FDI may also have utility in anticipating reductions in specific service lines. Monitoring financial distress and identifying hospitals at risk of service reductions could provide rural health advocates, hospital administrators, and policymakers with actionable insights, allowing proactive planning to sustain access to essential services and support community health and economic stability.