The Early Experience of Rural Emergency Hospitals

In January 2023, the Rural Emergency Hospital (REH) designation was established to reinforce access to outpatient medical services in areas that may not be able to sustain a full-service hospital. Early evidence from rural hospital leaders and communities suggests that converting to REH helps avoid closure while providing short-term financial stability. Existing peer-reviewed literature on REHs focuses primarily on (a) examining what types of hospitals are likely to convert to REH and (b) benefits and challenges associated with conversion to REH. However, due to the recency of the REH designation and associated data lag, empirical analysis of the types of hospitals that have applied to become REHs and the impact of conversion to REH on profitability have yet to appear in peer-reviewed literature.

The objective of this study was to quantitatively determine (a) the organizational and financial characteristics of hospitals that have converted to REH and (b) the impact of conversion on financial stability.

Using 2022-2025 Medicare Cost Report data on all REHs and hospitals eligible for conversion to REH from the September 2025 release of data from the CMS' Healthcare Cost Report Information System (HCRIS), we constructed a dataset that contains data on each of 17 characteristics for the 30 REH converters and 2,141 non-converters as of January 1, 2025.

Publications

• Average Salary Expense in Rural and Urban Hospitals Before and During the Low Wage Index Policy, 2018–2022
  Policy Brief
  North Carolina Rural Health Research and Policy Analysis Center
  Date: 04/2026
  This study describes hospital wage patterns for Critical Access Hospitals and Prospective Payment System hospitals from 2018–2022, examining the Low Wage Index Policy in effect between 2020-22.
• Average Salary Expense in Rural and Urban Hospitals in 2022 Compared With 2018, by Hospital Characteristics
  Policy Brief
  North Carolina Rural Health Research and Policy Analysis Center
  Date: 04/2026
  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.
• An Early Look at Profitability Before and After Conversion to Rural Emergency Hospital
  Policy Brief
  North Carolina Rural Health Research and Policy Analysis Center
  Date: 03/2026
  Converting to a Rural Emergency Hospital (REH) may provide struggling, low-volume rural hospitals with a more stable financial model by eliminating unprofitable inpatient services in exchange for some significant financial benefits. This brief provides an early assessment of financial performance before and after conversion to REH status.
• Geographic Variation in Average Salary Expense Among Rural Hospitals Nationwide, 2018–2022
  Policy Brief
  North Carolina Rural Health Research and Policy Analysis Center
  Date: 04/2026
  This brief examines how wages changed at rural hospitals from 2018–2019 to 2021–2022, focusing on geographic differences among CAHs and rural PPS hospitals. By tracking salary expense per FTE, it highlights the workforce and financial pressures rural hospitals faced as COVID disrupted care delivery and labor markets.
• Medicare Wage Index Trends in Rural and Urban Hospitals Before and During the Low Wage Index Policy, 2018–2022
  Policy Brief
  North Carolina Rural Health Research and Policy Analysis Center
  Date: 04/2026
  This study tracks how Medicare wage index values changed for rural and urban 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.