A Little More Political Desperation
Segment #537
The period from 2020 to 2025 has been a tumultuous one for rural hospitals, marked by the ongoing impact of the COVID-19 pandemic, persistent financial struggles, workforce shortages, and policy shifts.1 While the challenges are significant, there have also been efforts to introduce new models of care and support.
The Democrats contend The BIg Beautiful Bill Act is destroying rural hispitals. 33 rural hospitals will close Roughly 250,000 will lose healthcare 206,000 will get food aid cut “Make no mistake, this bill is seismically catastrophic.”
What they fail to mention is that under Biden rural hospitals have been in serious trouble and many have been forced to consolidate or close. So again avoid the facts and just concentrate on scaring the crap out of people. As you will see below, rural healthcare is a serious problem which as a start, BBB act has allocated 50 billion dollars. This won’t solve the problem but at least this administration has recognized the problem and is addressing it.
Here's a breakdown of the key aspects of rural hospital history during this time frame:
1. Continued Financial Distress and Closures:
Pre-existing Vulnerabilities: Rural hospitals entered this period already facing significant financial challenges due to low patient volumes, high operational costs in sparsely populated areas, a higher reliance on public payers (Medicare and Medicaid) with often inadequate reimbursement rates, and a greater share of uninsured patients.3
COVID-19 Impact: The pandemic exacerbated these financial strains.4 While some federal relief funds were provided, many rural hospitals experienced lower profit margins or losses on patient services in 2020 and 2022 due to increased costs (PPE, staffing) and decreased patient volumes as non-emergent care was delayed.5
Ongoing Closures: Rural hospital closures remained a serious concern.6 While exact numbers vary slightly by reporting agency, over 195 rural hospitals have closed or discontinued inpatient services since 2005, with a significant portion occurring in states that did not expand Medicaid. Projections for 2025 indicated that further proposed Medicaid cuts could push even more independent rural hospitals into financial distress and at risk of closure.
Service Line Reductions: Beyond full closures, many rural hospitals have had to curtail or eliminate critical services, most notably obstetrics units.7 From 2010 to 2022, 238 rural hospitals closed obstetrics units, while only 26 opened new ones. Behavioral health services also faced financial losses.8
2. Workforce Shortages:
Rural areas have long struggled with a lack of healthcare professionals, including physicians, nurses, and specialized staff.9 This challenge was intensified during the pandemic, placing immense pressure on existing workforces.10
Recruitment and retention remain major hurdles, leading to difficulties in providing necessary and high-quality services.11
3. Policy Responses and New Models:
Rural Emergency Hospital (REH) Designation: A significant development in this period was the introduction of the Rural Emergency Hospital (REH) designation by Medicare in 2023. This new provider type aims to support hospitals that operate 24/7 emergency departments but do not provide inpatient care, acknowledging that some regions cannot sustain a full suite of services. This allows financially vulnerable rural hospitals to convert, maintaining emergency access.
Telehealth Expansion: The pandemic accelerated the adoption and expansion of telehealth services.12 This has been particularly beneficial for rural populations by addressing barriers like distance and transportation, though challenges with broadband access and computer literacy persist. Efforts are underway to make some telehealth flexibilities permanent.
Medicaid Expansion: States that expanded Medicaid under the Affordable Care Act (ACA) generally saw rural hospitals in those states perform better financially, with a lower likelihood of negative margins.13 This highlights the importance of Medicaid funding for rural healthcare sustainability.
Advocacy for Policy Changes: Organizations like the National Rural Health Association (NRHA) have been actively advocating for policy changes, including:
Reducing regulatory burdens on small rural providers.
Implementing transformative changes to Medicare payment for rural hospitals.
Opposing site-neutral payment policies that could negatively impact rural hospital revenue.
Addressing prior authorization practices by Medicare Advantage plans.
Removing arbitrary mileage requirements for Critical Access Hospital (CAH) designation to allow more rural facilities to qualify for cost-based Medicare reimbursement.
Increasing Medicare Graduate Medical Education (GME) slots, with a focus on rural areas and primary care/psychiatry.14
4. Impact of Broader Healthcare Trends:
Value-Based Care: The shift from volume-based to value-based care models continued, requiring rural hospitals to adapt to new approaches and focus on improved health outcomes and cost control.15
Consolidation: While consolidation can offer efficiencies and help struggling providers, it also raises concerns about reduced competition, potentially leading to higher prices and less responsiveness to local community needs.16
Cybersecurity: Rural hospitals, like all healthcare entities, faced increasing cybersecurity threats, including ransomware attacks, requiring investment in robust security measures.17
In summary, the 2020-2025 period for rural hospitals was characterized by a continuation and intensification of long-standing challenges, particularly financial vulnerability and workforce shortages, significantly amplified by the COVID-19 pandemic. However, it also saw the implementation of new policy initiatives like the REH designation and a greater emphasis on telehealth, along with ongoing advocacy efforts to safeguard and strengthen rural healthcare access. The financial stability of rural hospitals remains precarious, with future policy decisions around Medicaid funding and reimbursement models being critical to their survival.18
Impact of The Big Beautiful Bill Act
While the $50 billion allocated to rural hospitals in the "Big Beautiful Bill" is a significant sum, it's unlikely to single-handedly "keep all hospitals open" given the simultaneous and substantial cuts to Medicaid embedded within the same legislation. Experts are largely concerned that the overall impact of the bill will be a net negative for rural hospitals, accelerating closures and service reductions in many areas. The effectiveness of the fund will heavily depend on how states manage and distribute the money, and whether it can truly offset the financial strain from reduced Medicaid funding and increased uncompensated care.