The Crisis of Rural Hospital Closures in the US and Canada

Why Rural Hospitals Are Closing

Over the past decade, the closure of rural hospitals in the United States and Canada has become an alarming trend, raising concerns about the availability of essential healthcare services for millions of rural residents. The closure of over 100 rural hospitals in the U.S. and the steady decline of similar institutions in Canada signal a critical need to understand the underlying causes and broader implications of these closures. The situation is dire, with significant consequences for the health and well-being of rural populations, as well as for the broader socio-economic fabric of these regions.

This image is AI-generated from ChatGPT and does not represent real people or real situations. Any depictions of real people are entirely coincidental.

In the United States, the trend is particularly severe. As highlighted in a recent report by the Center for Healthcare Quality and Payment Reform (CHQPR), more than 700 rural hospitals—over 30% of all rural hospitals in the country—are currently at risk of closing due to serious financial difficulties. Notably, over half of these hospitals face an immediate threat of closure. This trend is not confined to a single region; it spans nearly every state, with some states seeing the majority of their rural hospitals at risk.

Canada faces a similar, though somewhat less publicized, challenge. We actually saw this coming but did little to do anything about it, worsening the situation we see today. In 2023, the Ontario Health Coalition released a report saying that 1199 emergency rooms, almost exclusively in more remote areas, were closed; and more are expected to happen. Recently, four interior hospitals temporarily closed their emergency services. Rural hospitals in Canada, particularly in remote areas, struggle with maintaining financial viability. The dual pressures of underfunding and staffing shortages exacerbate the crisis, leading to reduced services and, in some cases, complete closures. The closure of rural hospitals in both countries results in the loss of critical healthcare services, forcing residents to travel long distances to access emergency and inpatient care. This not only jeopardizes the health of rural populations but also threatens the economic sustainability of these communities, which often rely on local healthcare institutions as major employers and pillars of their local economies.

Underlying Causes of Rural Hospital Closures

Several factors contribute to the ongoing crisis of rural hospital closures, with financial challenges being at the forefront. In the United States, the primary issue is the inadequacy of payments from private health insurance plans. According to the CHQPR report, the majority of at-risk rural hospitals are losing money on patient services. This financial shortfall is particularly acute because it costs more to deliver healthcare in rural communities due to lower patient volumes and higher per capita costs associated with maintaining essential services like emergency departments. Despite these higher costs, many health insurance plans do not pay enough to cover the expenses, leading to persistent financial losses.

Moreover, the termination of special federal assistance provided during the COVID-19 pandemic has exacerbated the financial strain on rural hospitals. Without these additional funds, more than one-third of rural hospitals in the U.S. have reported financial losses in the last two years. In Canada, similar issues of inadequate funding and underpayment by provincial health insurance systems have placed rural hospitals under severe financial pressure. The situation is worsened by a chronic shortage of healthcare professionals willing to work in remote areas, leading to an over-reliance on temporary staff, which further inflates operating costs.

This image is AI-generated from ChatGPT and does not represent real people or real situations. Any depictions of real people are entirely coincidental.

The Impact on Rural Communities

The closure of rural hospitals has far-reaching implications beyond the immediate loss of healthcare services. In the U.S., for instance, the closure of a rural hospital often means that residents lose access to not only emergency and inpatient care but also to essential services like laboratory tests, imaging studies, and primary care. This loss is particularly devastating in isolated communities, where the nearest alternative healthcare facility may be hours away. The absence of readily available healthcare can lead to delayed diagnoses, worsening of chronic conditions, and, in some cases, preventable deaths. Telemedicine was adopted more widely during the pandemic, in an attempt to recoup financial losses during the pandemic that came from decreased patient demand for services. But, in many areas, including Ontario community health centers, acquiring the funds to get started in virtual care was the biggest barrier.

In Canada, the closure of rural hospitals has similarly dire consequences. Rural communities, which often depend on local hospitals as key employers, face economic decline when these institutions shut down. The loss of a hospital can trigger a domino effect, leading to the outmigration of younger populations in search of better opportunities, further eroding the social and economic fabric of these communities. Additionally, the closure of rural hospitals threatens Canada’s ability to maintain a robust national healthcare system that ensures equitable access to care for all citizens, regardless of where they live.

This image is AI-generated from ChatGPT and does not represent real people or real situations. Any depictions of real people are entirely coincidental.

Potential Solutions and Policy Recommendations

Addressing the crisis of rural hospital closures requires a multifaceted approach that includes both immediate financial support and long-term structural reforms. One of the most critical steps, as suggested by the CHQPR, is to ensure that health insurance payments—both from private insurers and government programs—are sufficient to cover the higher costs associated with delivering healthcare in rural areas in the US. This adjustment could help stabilize the finances of at-risk hospitals and prevent further closures.

Healthcare Excellence Canada hosted collaborative discussions to explore strategies and care delivery implications related to emergency department closures in northern, rural, and remote communities. They released a summary of these discussions on February 1, 2023, and focused on three messages:

1. A stable, experienced and sustainable workforce

2. Connections to timely and appropriate care

3. Health service design that reflects community voices and new models of care

These are broad messages, and their report provides more specific examples of policy strategies. Another essential strategy is the implementation of standby capacity payments, which would provide rural hospitals with the financial support needed to maintain essential services, such as emergency care, regardless of patient volume. This approach would help rural hospitals cover their fixed costs and ensure that critical services remain available to rural populations.

The closure of rural hospitals in the United States and Canada is a critical issue that threatens the health and well-being of millions of rural residents. It also poses a significant challenge to the broader healthcare systems in both countries. To reverse this trend, immediate action is needed to address the financial challenges faced by these hospitals and to implement policies that ensure sustainable, long-term access to healthcare for all rural communities. Without such interventions, the future of rural healthcare—and the communities that depend on it—remains at grave risk.

---

1. Healthcare Humanized™: www.youtube.com/@healthcarehumanized

2. The Academy of Research Methods™: https://learn.methodologists.org

3. LinkedIn: https://ca.linkedin.com/company/the-methodologists

The Methodologists (TMT)™. mobilizes organizations to design people-centred systems through stories and rigorous research.

Learn more about us and our services by visiting our website. You can also explore our YouTube channel, Healthcare Humanized™, or connect with us on LinkedIn. For support and services, reach out to us via email at info@methodologists.org.