Private insurance — not Medicare or Medicaid — is the biggest reason 720 rural hospitals are at risk of closing, according to the Center for Healthcare Quality and Payment Reform.
CHQPR’s analysis, current as of May 2026, found the hospitals, which represent about a third of all rural facilities nationwide, are struggling under three compounding financial problems: losses on patient services, insufficient revenue from other sources to offset those losses, and low financial reserves.
Three pressures land hospitals on the at-risk list.
CHQPR attributes closure risk to a combination of three problems compounding each other:
- Losses on patient services. More than 40% of rural hospitals lose money delivering care. It costs more to deliver healthcare in small rural communities than in urban ones, since fixed costs — staffing an emergency department around the clock, for instance — don’t shrink along with a smaller patient population, and many health plans don’t pay enough to cover them.
- Insufficient revenue from other sources to offset those losses. Many hospitals have stayed open despite losing money on patient services because they had local tax revenue or government grants to fall back on. That cushion is shrinking, however. The special federal assistance many rural hospitals received during the pandemic has ended, and there’s no guarantee that tax revenue or grants will be sufficient or available going forward. As a result, almost a third of rural hospitals lost money overall in 2024-25.
- Low financial reserves. The hospitals at greatest risk of closing have more debts than assets, or they lack adequate net assets — assets other than buildings and equipment, minus debt — to offset losses on patient services for more than a few years.
The real driver
Most proposed fixes for rural hospitals focus on raising Medicare or Medicaid payments or expanding Medicaid eligibility, CHQPR said, based on the belief that most rural patients are covered by public insurance or are uninsured. In reality, about half of the services delivered at the average rural hospital go to patients with private insurance, according to the report. CHQPR’s analysis of 2024-25 hospital cost reports found that, of the three payer categories that lose hospitals money — uninsured patients, Medicaid patients, and private-insurance patients — losses on private-insurance patients are the biggest single cause of at-risk hospitals’ overall losses.
That distinction separates the hospitals on the at-risk list from those that aren’t, according to the report. Rural hospitals that are not at risk of closing are typically profitable on patient services overall. They receive payments from private health plans that not only cover the cost of caring for their privately insured patients, but generate enough of a profit to offset losses on care for uninsured and Medicaid patients. At-risk hospitals don’t have that offset, either because private plans in their market pay less, or because they don’t have enough privately insured patients to make up the difference.
How CHQPR says closures could be prevented
CHQPR’s recommendations center on how, not just how much, rural hospitals get paid. The report calls on Congress to require Medicare Advantage plans to pay rural hospitals at least as much as traditional Medicare and to pay claims promptly. The report also urges employers and rural residents to choose private health plans that pay their local hospitals adequately, since most private insurers are unlikely to change their payments otherwise. It also argues rural hospitals shouldn’t be forced to eliminate inpatient care in order to receive higher payments for other services, as the Rural Emergency Hospital program currently requires.
Beyond payment levels, CHQPR proposes a structural fix it calls Standby Capacity Payments: a monthly payment, from both private and public payers, that would cover the fixed cost of keeping essential services like the emergency department staffed and ready, paid alongside the standard service-based fees hospitals already receive when care is delivered. CHQPR estimates that raising payments enough to prevent closures at all the at-risk hospitals would cost about $6 billion a year — roughly 0.1% of national health spending — and argues that allowing the hospitals to close instead would likely cost the health system as much or more, since reduced access to preventive and timely care would leave rural residents sicker and in need of more services down the line.