The Impact of High Hospital Fixed-Cost Ratios on Rural Populations
Link
Date
06/2025
Description
This brief describes the regional variation in Critical Access Hospital (CAH) and Low-Volume Hospital (LVH) status with respect to average fixed-to-total-cost ratios, finding that CAHs tend to have the highest ratios, followed by LVHs. However, the average ratio for each status differs regionally across the United States.
Key Findings:
- Fixed-to-total-cost ratios vary along the rural continuum. Recent RUPRI research found that hospitals in noncore counties without towns of at least 2,500 people have the highest ratios, with a median estimate of 0.933 (where 1 means 100 percent of costs are fixed). Moreover, groups of distinct fixed-to-total-cost profiles emerged based on Urban Influence Codes (UICs).
- As UIC groups become more rural, hospitals' estimated fixed-to-total-cost ratios increase. Populations in those UIC groups tend to be older, more likely to be on Medicare or Medicaid, less likely to have a college education, and less likely to have employer-sponsored insurance.
- CAHs and LVHs have higher fixed-to-total-cost ratios. CAHs are concentrated in the upper Great Plains states, with 80.5 percent and 77.6 percent of all nonmetropolitan hospitals in North Dakota and Montana, respectively, having the CAH designation. LVHs tend to be in the South—46.6 percent of Alabama's nonmetropolitan hospitals have the LVH designation—and are also common in some Mountain states.
- Because the level of rurality itself matters, policymakers could identify ways that this insight could be used to refine payment policies to better support all Americans' access to hospital services.
Center
RUPRI Center for Rural Health Policy Analysis
Authors
Abigail Barker, Eliot Jost, Timothy McBride, Keith Mueller