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COVID-19’s Financial Impact on Rural Hospitals

April 09, 2024

COVID-19 provider relief funds were critical to support rural hospitals during the pandemic, but financial pressures on these facilities continued to persist after the federal funding expired.

A new issue brief from the American Hospital Association investigates the ways COVID-19 affected rural hospitals and the ongoing challenges they face.

“These challenges may have been particularly severe for rural hospitals since, prior to COVID-19, rural hospitals were already struggling with shrinking margins, declining volumes, workforce challenges and other barriers to providing care,” the report notes.

Among the key takeaways:

  • On the margins:  About 48 percent of rural hospitals had consistent negative operating margins from patient services before and during the pandemic.
  • Critical relief:  The provider relief funds provided critical resources to rural hospitals amid declining volumes and other challenges.  During 2020, 41 percent of these rural facilities would have reported negative total margins without the funding.
    • About 26 percent reported losses after accounting for the supplemental relief funding.
  • Key factors:  Affiliation with a system and percentage of discharges from Medicare/Medicaid patients were contributing factors for rural hospital margins.
  • Notable:  Just 12 percent of rural hospitals in the sample had positive care margins before and during the pandemic.
  • Bottom line:  “However, these observations raise questions about how rural hospitals will cope financially as COVID-19 funding has ended but persistent financial challenges remain," the report notes.

The AHA report, prepared by the Virginia Commonwealth University College of Health Professions, is available online.