The Rural Hospital Crisis: How to Strengthen, Stabilize and Sustain

Introduction:

Twenty percent of Americans live in rural communities today. As a result, the epidemic of rural hospital closures is poised to impact a significant portion of the U.S. population. Across the country, more than 700 rural hospitals, one third of all rural hospitals in the U.S., are at risk of closing due to severe financial distress. Over 300 are at immediate risk.

And unfortunately, we can only expect these conditions to worsen, as impending Medicaid waiver changes threaten to intensify that crisis by tightening eligibility and introducing work requirement driven coverage losses that will increase uncompensated care for facilities already on razor thin margins. Without decisive action, rural communities risk a wave of hospital shutdowns that will lead to longer travel times for care, delayed treatment, and avoidable deaths.

The burden of navigating out of this often falls on hospital leaders who are already on the brink of burnout just trying to keep the lights on while their board is looking at them through a microscope, and staff are desperately looking to them for security and clarity.
While some organisations engage third party advisors with experience in rural healthcare transitions, others look for support from regional partnerships or community collaboration. Either way, the resulting strategic plans should always be tailored to the unique needs of the specific community and include some foundational elements, including stabilising the operation, strengthening hospital talent and assets, ensuring continued access to care, and preparing for efficient and thoughtful closure if inevitable. Each of these areas plays a critical role in helping leaders make structured, values-based decisions that protect both their organisations and the communities that rely on them.

Stabilising the operation

Whenever a hospital or health system is in crisis, the work should begin with focusing on how to stabilise the operation for the immediate future. This starts with a strategic plan that includes elements like ways to meet cost reduction goals, a total population health assessment, key diagnoses and vital equipment for the community. Even when closure is unavoidable, this work is critical, allowing leaders to wind down operations in a deliberate way that captures value, controls costs, and preserves essential services.

A central focus during this phase is improving reimbursement and modernising the revenue cycle. Many rural facilities rely on small teams that juggle clinical care, billing, documentation and administration. Many of these teams are also short staffed or lack specialised expertise. The result can be incomplete coding, missed documentation requirements, and lost revenue that these hospitals cannot afford to leave on the table. In my experience, I routinely see roughly 80% of claims submitted by clinics are rejected on the first pass, and even after multiple resubmissions, rejection rates can remain as high as 70%. For small rural clinics, initial rejection rates as high as 90–95% are not uncommon. In one clinic oriented health system alone, I encountered 900,000 unpaid claims, some more than 24 months old.

This is not a minor inefficiency; it is a threat to survival. Addressing these gaps often requires more advanced revenue cycle capabilities, including improved data practices, technology adoption and sometimes even bringing in specialised expertise. The result is a hospital that no longer risks haemorrhaging the dollars they need to stabilise or close responsibly.

Strengthening hospital talent and assets

The second part of the process involves ensuring the health of the facility’s talent, equipment and population. While of course the goal is to prevent closure, this step is also imperative to ensuring continued access to care if the hospital must close its doors. I recommend that systems begin by looking at the equipment, talent and population audit covered in the strategic plan. From there, they can identify how to incorporate those elements into a sustainable future system of care. In these moments of dire need and transition, hospitals can’t afford months of recruitment efforts to staff up the right talent needed to steady the ship. Morale isn’t always in their favor, either. What they need is often experienced talent, feeling comfortable working under the specific pressure they’re under, and agreeable to short-term work. Often, this results in relying on short-term or temporary staffing to fill the gaps and maintain a high quality of care, while supporting existing teams.

Ensuring continued access to care

For some hospitals, closing may be inevitable. While that is an unfortunate reality, responsibility for what comes next does not rest solely with the hospital leadership team. Instead, a closure creates a shared moral imperative—one that spans the closing organisation, partners, and the broader community—to ensure people continue to have access to medical care long after the doors shut and that healthcare providers have sustainable places to land to continue caregiving. This is where community-wide coordination and experienced partners become essential. The best outcome emerges when leaders proactively design what comes next together, instead of allowing care gaps to form by default.

Often, that results in a broader community health roadmap with straightforward community education to help people understand what their care options are. It can also involve helping strengthen home care, local clinics and telehealth options.

One example is a health system we worked with in Northern Minnesota. The local hospitals were at risk of closing, and we identified a large swath of the population that would lose care. We are working with more than 40 providers at those hospitals to ensure care in that area can be continued via independent clinics in the event of a hospital closure. This included helping them set up sustainable reimbursement models, securing a strong talent base, and mapping out individualised care plans, among other safeguards.

In some cases, ensuring continued access to care could also boil down to the individual level, where patients are receiving customised roadmaps of where they should go to receive treatment for their specific conditions. Ultimately, how a hospital plans for the community after closure becomes a part of its legacy, whether the healthcare ecosystem chose to disengage, or to continue to care for the community – in the community’s most vulnerable moments.

We all know that the impact of rural hospitals extends beyond being just care providers; they are economic anchors, major employers, and essential components of a community’s emergency response. When one closes, the ripple effects extend far beyond healthcare. In today’s epidemic of rural hospital closures, leaders are being called not just to act in survival mode, but to act decisively either to stabilise what can be saved or to ensure that, even in closure, communities are not left without a clear, compassionate path to care. In these climates, collaboration across health systems, community organisations, and even third-party partners is critical to ensure continuity of care and help transform even the hardest moments into purposeful next chapters.