Why are rural hospitals closing at a much faster rate than their non-rural counterparts?

The Department of Health and Human Services’ Office of the Assistant Secretary for Planning and Evaluation recently explored this question with an intensive data-based approach that yielded the following conclusions about rural hospital closures between 2012 and 2023 (all bullets are direct quotes from the agency’s report):

  • Rural hospitals face unique challenges that make them especially vulnerable to closure or conversion to outpatient-only facilities. While 8% of rural hospitals have closed or converted since 2010, only 3.5% of urban hospitals have done so during the same period.
  • From 2012-2023, rural hospitals that close or convert tend to have lower occupancy rates (31% vs. 47%), more likely to be for-profit (38% vs. 9%), and more likely to be located in a county that borders an urban county (72% vs. 57%) than those that remain open.
  • Low occupancy rates play the most important role in increasing the risk of closure. A 7 percentage-point decrease in occupancy rates (1 standard deviation) will increase the likelihood of closure by more than one-third.
  • For-profit hospitals are at higher risk of closure than non-profits and government hospitals. All else equal, the average for-profit is three times more likely to close or convert relative to a government hospital.
  • Urban county adjacency significantly increases closure risk. Hospitals in rural counties that are adjacent to urban counties are 80% more likely to close or convert, compared to those in rural counties that are not adjacent to an urban county.
  • The proportion of Medicare or Medicaid patients does not predict a rural hospital’s likelihood of closure or conversion.

In its very data-intensive analysis, ASPE quantified inpatient occupancy rates; produced summary statistics for rural hospitals; chronicled the characteristics of open, closed, and converted rural hospitals; tallied predictors of rural hospital closures and conversions; calculated the predicted risk of closure or conversion by hospital type broken down by ownership, critical access hospital status, occupancy levels, and adjacency to an urban county; and organized hospital characteristics by closure risk quintile.

Learn more about the data and methodology underlying ASPE’s analysis and conclusions from its new report “Determinants of Rural Hospital Closures or Conversions in the United States.”