2018‐23 Profitability of Rural and Urban Hospitals by Medicare Payment Designation


This study compares profitability of three types of hospitals in both urban and rural locations: Critical Access Hospitals (CAHs), Prospective Payment System-only (PPS) hospitals by number of acute beds, and PPS hospitals with special payment designations over a five-year period consisting of two years before and three years after COVID-19.

Key Findings:

  • Median profitability of both rural and urban hospitals increased over the first four periods (except for a small downturn of urban hospitals in 2020-21), but there was a large decrease in profitability of both rural and urban hospitals in 2022-23.
  • Median profitability of rural hospitals was less than urban hospitals in 2018-19 and 2019-20, but higher than for urban hospitals in 2020-21, 2021-22, and 2022-23.
  • In the last period (2022-23), the highest median profitability was urban PPS with 25 or fewer beds (PPS <26), and the lowest was rural Rural Referral Centers (RRCs).
  • In 2022-23, median profitability of CAHs, PPS <26, PPS 26-50, Medicare Dependent Hospitals, and RRCs in rural locations was lower than for the same types of hospitals in urban locations. Median profitability of PPS >50 and Sole Community Hospitals in rural locations was higher than for the same types of hospitals in urban locations.
  • Profitability of rural hospitals in 2020-21 and 2021-22 was influenced by the Public Health Emergency funding distributed during the COVID-19 pandemic.
North Carolina Rural Health Research and Policy Analysis Center, Rapid Response to Requests for Rural Data Analysis
Sruthi Srinivasan, Kristie Thompson, George Pink