Concerning Outlook for Rural Hospitals

June 08, 2026

A third of Pennsylvania’s rural hospitals are at risk of closing as payment for health care services continues to lag behind the cost of delivering care, a national report found.

The analysis by the Center for Healthcare Quality and Payment Reform (CHQPR) found that 720 rural hospitals—just under a third nationally—are at risk with 294 (13%) in immediate jeopardy. More than 40 percent of rural hospitals nationally lose money delivering care and many do not have the financial reserves necessary to sustain years of losses.

“Most at-risk hospitals are in isolated rural communities, where closure of the hospital would force residents of the community to travel a long distance for emergency or inpatient care, the report notes. “In addition, rural hospital closures threaten the nation’s food supply and energy production, because farms, ranches, mines, drilling sites, wind farms, and solar energy facilities are located primarily in rural areas, and they will not be able to attract and retain workers if health care isn’t available in the community.”

Here are key takeaways know:

• By the numbers:  CHQPR found 17 Pennsylvania rural hospitals (33%) are at risk of closing and nine (17%) are at immediate risk.
• Payments don’t cover costs:  For rural hospitals most at risk nationally, inadequate payments from commercial insurers, including Medicare Advantage plans, were not enough to cover the cost to provide care and offset losses from caring for patients covered by Medicare and Medicaid, which pay below cost, and those who are uninsured.
• Rural-specific challenges:  It costs more to deliver care in rural communities, the report notes, “not because rural hospitals are inefficient, but because of the smaller number of patients served relative to the fixed costs of the services.”
• Supporting rural access:  The report recommends aligning rural hospital payments with their real cost of delivering care and creating “standby” payments that support 24/7 readiness to deliver essential services despite lower patient volume.
• Pennsylvania challenges greater:  A report prepared for HAP earlier this year by national consulting firm Oliver Wyman estimated that 12–14 Pennsylvania hospitals could close over the next five years without action to address inadequate reimbursement. The analysis found Pennsylvania hospitals are paid less than their peers in other states for the care they provide, with the state’s Medicaid program and commercial insurers paying 11 and 29 percentage points below the national median, respectively.

The CHQPR report is available online.