Rural hospitals in danger of closure if budget bill passes

Nearly 400 independent rural hospitals in the U.S. could be pushed to the brink of closure if the Senate passes the budget reconciliation bill, according to a report from Families USA.

The Senate is expected to vote on the budget reconciliation bill – also known as the “Big Beautiful Bill” – before Congress leaves Washington for the Independence Day holiday.

The bill, “isn’t just another vote in Congress, but the biggest rollback of Medicaid ever and the biggest rollback of health care ever in the U.S.,” said Anthony Wright, Families USA executive director.

Families USA released an analysis showing that just two of the many proposed cuts to federal Medicaid funding — national work reporting requirements and eligibility checks every six months — would directly harm independent rural hospitals, putting them at significantly greater risk of closure or acquisition by large corporate systems.

"Many rural independent hospitals are already facing tough times, many with negative net revenue, and this bill would push many more into the red. These proposed Medicaid cuts and coverage terminations could be the final blow for many independent rural hospitals across America. Medicaid is often the biggest line item in these rural hospitals' budgets, and reducing those paying patients and increasing uncompensated care, on top of direct cuts, would be devastating," Wright said.

Senate Republicans are expected to change the bill to include a fund in to help rural hospitals that could be impacted by Medicaid changes, Politico reported. Negotiations on the bill’s Medicaid and provider tax language are ongoing — so the fund, and its inclusion, could change up until the bill’s release.

But Wright said the rural hospital fund is not necessarily the answer to the challenges such hospitals would face in the wake of Medicaid cutbacks.

"A rural hospital fund might be a good idea on its own, but not as a band-aid to cover the gaping wound this budget bill would create, with the biggest cut in history to Medicaid. Since Medicaid is also the primary payer for maternity wards, nursing homes and so much of the health system we all rely on, these massive Medicaid cuts will be felt by all facing scaled-back services and outright closures of key health providers — especially in rural parts of the country. This bill betrays not just the rural Americans who voted for lower costs, but all Americans who need access to quality, affordable health care."

The analysis found that cuts to Medicaid would push 55 more independent rural hospitals into the red, leaving 380 independent rural hospitals across 26 states at serious risk of closure nationwide.

Independent rural hospitals could lose an estimated $465 million in total patient revenue — on average, 56% of their net income — in 2026 due to federal Medicaid cuts. This amounts to an average loss of $630,665 per hospital.

Losing a local hospital has devastating consequences for a rural community, the analysis said. These consequences include:

• Increasing the distance patients must travel to access health care.
• Reducing healthy competition among all other hospitals and health providers, driving significant price increases (on average, more than 6%), particularly if the remaining hospitals are affiliated with large corporate systems.
• More rural residents forgoing needed care entirely, with deadly consequences — especially for patients experiencing emergencies, such as a heart attack or stroke.
• Reducing rural jobs by 14%, hurting rural workers and local economies.

Hospital closures impact everyone

Medicaid cuts “will impact individuals and families, and will impact entire communities,” said Rhonda Rogombe, health and safety net policy analyst at the West Virginia Center on Budget and Policy. “When a hospital closes, that impacts everybody, not only people who are on Medicaid.”

Rogombe predicted Medicaid cuts will force states to make difficult decisions on how to fund health care for those in need.

“When we force these difficult decisions down to our states, it will have a significant impact on rural clinics,” she said.

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Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].