What is a Rural Emergency Hospital
And Why Do They Matter?
Rural hospitals are struggling. COVID-19’s aftermath, fewer patients, and staff shortages are forcing many to shut down. When a hospital closes, your community feels it: longer travel for care, higher healthcare costs, and a hit to the local economy.
To help address this crisis, Congress introduced the Rural Emergency Hospital (REH) designation, offering struggling hospitals a way to stay open and continue serving their communities. In this post, we’ll break down why rural hospitals are closing, how REHs work, and what this means for your community’s healthcare future.
The Growing Rural Hospital Crisis
Rural hospitals continue to face mounting financial pressures, putting essential healthcare services at risk. According to the latest report from the Chartis Center for Rural Health, 50% of rural hospitals are operating at a loss, a sharp increase from 43% in the previous year.
- 418 rural hospitals are currently vulnerable to closure, up from previous estimates.
- These hospitals span 38 states, with the highest numbers in Texas (47), Kansas (46), Mississippi (28), Oklahoma (23), and Georgia (22).
- Since 2010, 167 rural hospitals have either closed or converted to models that exclude inpatient care.
Why Are Rural Hospitals Struggling?
Several key factors contribute to the rising risk of closures in rural areas:
- Declining Patient Volumes: With fewer patients using local hospitals, revenue streams are stretched thin.
- Staffing Shortages: Hospitals in rural areas struggle to recruit and retain healthcare workers.
- Financial Strain: Low patient volumes and an over-reliance on public insurance like Medicaid and Medicare create funding challenges.
- Aftershocks of COVID-19: The pandemic left many facilities financially and operationally strained, and some are still recovering.
What This Means for Rural Communities
When a rural hospital closes or reduces services, patients are forced to travel longer distances for care, increasing the risk of poor outcomes in emergencies like strokes or heart attacks. Delayed treatment can mean the difference between life and death.
At the same time, the cost of care rises. Ambulance services must cover greater distances, stretching limited resources, while patients face higher medical bills and transportation expenses. With fewer healthcare options, providers struggle to stay financially stable, making it even harder to sustain care in these communities.
Beyond healthcare, rural economies suffer. Hospitals are often major employers, and their closure leads to job losses that impact local businesses and weaken the entire community. The loss of a hospital is more than a healthcare issue—it’s a crisis that affects every aspect of rural life.
The Ripple Effects of Hospital Closures
When a rural hospital closes, the community feels the impact in many ways:
- Emergency Care Delays: Patients with critical conditions like strokes or heart attacks face longer travel times, often with serious consequences.
- Higher Costs: Limited healthcare access can drive up costs for patients forced to seek care farther away.
- Job Losses: Hospitals are often among the biggest employers in rural areas, and closures displace skilled workers.
- Economic Decline: A hospital’s closure can lead to economic downturns in rural communities, as it not only provides healthcare but also supports local businesses.
The Role of Rural Emergency Hospitals (REH)
To address this crisis, the Rural Emergency Hospital (REH) designation was introduced under the Consolidated Appropriations Act (CAA). Instead of offering inpatient services, REHs focus on providing essential outpatient care, including emergency services. This designation comes with incentivized Medicare payments, providing much-needed financial support to healthcare facilities on the brink of closure.
How Can a Rural Hospital Transition to an REH?
Becoming an REH requires meeting specific eligibility criteria, completing an application process, and adhering to operational requirements.
Eligibility Requirements
For a hospital to qualify as a Rural Emergency Hospital, it must:
- Currently operate as a Critical Access Hospital (CAH) or Rural PPS hospital (recently closed CAHs are not eligible).
- Have 50 or fewer inpatient beds prior to the application.
- Be located in a state that permits outpatient-only hospitals (some states may need new legislation).
Operational Requirements
Rural Emergency Hospitals must meet the following standards:
- Operate a 24/7 emergency department staffed with qualified personnel ready to handle critical cases.
- Limit patient stays to an annual average of no more than 24 hours.
- Offer CMS-approved outpatient services alongside emergency care.
- Maintain a transfer agreement with a Level 1 or 2 trauma center for patients needing advanced care.
- Comply with EMTALA regulations to ensure all patients receive emergency treatment.
- Meet federal quality reporting requirements.
Staffing and Equipment
To qualify as an REH, the facility must maintain:
- On-site staff 24/7, including a physician, advanced practice nurse, or physician assistant.
- Federal standards for emergency equipment, supplies, and safe blood storage.
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The Application Process
Hospitals seeking REH designation must submit an action plan detailing:
- Services they will continue to offer post-transition.
- How they will utilize additional funding (e.g., telehealth services, ambulance fleets, or facility upgrades).
How Are Rural Emergency Hospitals Reimbursed?
To make the REH model financially viable, facilities receive enhanced Medicare reimbursements, including:
- A 5% increase in Medicare payments for outpatient services.
- Monthly facility payments based on Critical Access Hospital funding levels in 2019, split among all REHs.
These incentives provide a much-needed financial lifeline, ensuring that vital healthcare services remain accessible to rural communities.
What’s Next for Rural Healthcare?
The number of hospitals converting to REHs remains small, with many facilities weighing the financial viability of this model. While the additional Medicare reimbursements provide relief, long-term sustainability remains a challenge.
For rural hospitals struggling to remain open, transitioning to an REH could be a vital step in ensuring continued healthcare access for their communities. However, policymakers and healthcare leaders must continue exploring new solutions to prevent further hospital closures and protect rural healthcare infrastructure.
Want to learn more?
Download our Definitive Guide to Rural Health for expert insights, practical solutions, and strategies to help your community thrive.
Considering the REH Designation?
If you’re a rural healthcare provider, hospital administrator, or practice owner, now is the time to explore whether the REH designation makes sense for your facility. Carefully evaluate the financial, operational, and community impact to ensure this solution aligns with your organization’s goals.
For additional resources on rural healthcare solutions, from Critical Access Hospitals (CAHs) to Rural Health Clinics (RHCs), visit our educational library. Together, we can create sustainable healthcare solutions for all communities, no matter how remote.
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