How Have the Sources of Revenue for Rural Hospitals Changed Since 2005?
As rural hospitals continue to face financial distress and closure, an understanding of the causes of financial challenges enables policymakers to craft strategies to mitigate closures and design alternatives for communities unable to sustain their hospital. One driver of financial difficulty is the decrease in acute admissions at rural hospitals. In the Center's 2019-2020 project, researchers found acute average daily census for rural hospitals declined by 24% from 2011 to 2017. The Center's and other research have shown a decrease in inpatient care. The causes of the decline in inpatient volume at rural hospitals are complex and multifaceted, for example, patient bypass, competition, innovation and improvements in clinical procedures, and the transition from volume to value. Regardless, the reduction in inpatient volume leads to lower revenue for both inpatient care and ancillary services. Thus, outpatient business is increasingly more important to rural hospitals than to urban hospitals.
This was a longitudinal study of hospital financial performance. It built on the Center's standard hospital financial database it creates from each release of the Medicare cost reports, which contains hospital characteristics (e.g., rurality, census region), financial performance (e.g., outpatient revenue, inpatient revenue), and utilization metrics (e.g., acute discharges and days). The Center also used geographic variation and system membership.
Trends in Revenue Sources Among Rural Hospitals
North Carolina Rural Health Research and Policy Analysis Center
Possible issues with existing rural hospital financing models suggest that outpatient-centric payment methods may be more effective in providing financial relief to rural hospitals. Given this, we explored the financial importance of outpatient care to rural hospitals by estimating changes in outpatient care as a source of revenue.