Research Alert: January 11, 2022

Rural Hospitals that Closed between 2017‐20: Profitability and Liquidity in the Year Before Closure

In this brief, we use Centers for Medicare & Medicaid Services Healthcare Cost Report Information System data to examine the preclosure profitability and liquidity performance of rural hospitals that closed between 2017‐20 and compare it to the median performance of rural hospitals that remained open during the same year.

Complete closures are defined as facilities that no longer provide health care services and converted closures are defined as facilities that no longer provide inpatient care, but continue to provide some health care services [e.g., primary care, skilled nursing care, rehabilitation care). In this study, we analyzed 56 rural hospitals that closed between January 2017 and August 2020 and found that:

• The closed hospitals were clustered in the Southeast and South‐central census divisions.
• In the year before closure, most rural hospitals had a negative operating margin, negative total margin, and few days cash on hand.
• In comparison with rural hospitals that remained open between 2017‐20, most rural hospitals that closed were much more unprofitable and much less liquid.

Additional Resources of Interest:

• More information about the North Carolina Rural Health Research and Policy Analysis Center
• More information about the Rapid Response to Requests for Rural Data Analysis
• More information from the Rural Health Information Hub's topic guides: Critical Access Hospitals, Rural Health Policy