Kansas has more hospitals in immediate danger of closing than any other state, according to a recent analysis of the financial health of the country’s most remote hospitals.
The Center for Healthcare Quality & Payment Reform, a national policy organization, found that 68 rural Kansas hospitals are at risk of closing, including 30 at immediate risk. Its analysis also put Missouri among the 10 worst states for rural closings, with 29 rural hospitals at risk of closing, including a dozen at immediate risk.
Nationwide, the analysis found that 756 hospitals — one-third of all rural hospitals — could be in jeopardy, including 323 that are at immediate risk of closure. Hospitals that are losing money on patient services and don’t have enough reserves to offset those losses for more than six or seven years are considered to be at immediate risk.
Harold D. Miller, the Center for Healthcare Quality’s president and CEO, said the problem boils down to simple economics. Rural hospitals spend more than they bring in.
Because they are located in remote parts of the country, rural hospitals have fewer patients. But operating costs — like necessary staff and equipment — are the same as for hospitals in more populated areas.
At the same time, the cost of health care continues to climb, workforce shortages make it more expensive to fill jobs at rural facilities and much of the financial support that helped them through the COVID pandemic has gone away.
“Costs have gone up and payers haven’t kept up,” Miller said. “The hospital isn’t being paid based on actual cost. More likely it gets underpaid.”
Challenges keep growing
A pessimistic assessment of the financial health of rural hospitals is not new. For years, experts have warned about pending closures. And across the country almost 200 rural hospitals have shut down since 2005, including 19 across Missouri and Kansas.
The rural hospitals that have closed their doors since 2012, the Center for Healthcare Quality found, had a median operating loss of 9%. Rural hospitals that stayed open had a median 5% profit margin.
Cindy Samuelson, spokeswoman for the Kansas Hospital Association, cautioned that the report’s dire predictions of 30 Kansas hospitals being on the brink of closing may be overblown. Many rural Kansas communities provide taxpayer support in the form of a city or county levy. Although that funding is not guaranteed, she said it is a good bet that it will continue.
“I really think you’re not going to see 30” hospitals close, Samuelson said. “Those people who live in those 30 areas are going to say, ‘We’ll pay the tax. Health care is important to us.’”
Kansas still has 100 rural hospitals — second only to Texas — while Missouri has 58. But many operate at a loss. And the challenges only seem to be growing.
Recent changes at the federal level are expected to dramatically increase the number of people without insurance beginning this year. That will likely add to the number of patients hospitals have to treat for free, and it is expected to ultimately lead to more expensive care since people who skip doctors’ appointments or medicine often end up sicker.
Hospitals also are watching what will happen at the state and federal levels to the 340B Drug Pricing Program, which helps many hospitals subsidize the cost of care across their operations. Some lawmakers would like to change the way the program works, which could leave hospitals with another big funding gap.
“It could impact essential services the hospitals provide,” Samuelson said.
Lagging reimbursement rates
While loss of the drug program or reduced government insurance coverage under Medicaid and the Affordable Care Act marketplace will likely mean problems for hospitals, Miller said many rural hospitals will face grim prospects even if none of those changes occurs. Already, he said, they are dealing with the reality that insurance plans aren’t paying them enough to cover their expenses.
Many people assume Medicare and Medicaid are the primary culprits for funding shortfalls, Miller said, but private insurance is actually a bigger factor for many small rural providers.
Private insurance is often the largest contributor to rural hospital revenue — especially since private Medicare Advantage plans have become increasingly popular. But often hospitals are getting the smallest reimbursements from that sector.
Traditional Medicare plans are required to cover most of the cost of care for the patients they cover, but the same is not true of Medicare Advantage plans, which are sold through private insurance companies and work like any other private plan.
Rural hospitals may fall outside a Medicare Advantage plan’s network, or the plan will quibble about paying for certain procedures or services. That can leave patients without nearby care options and hospitals without funds to cover costs.
All of it contributes to rural hospitals’ funding gaps, Miller said.
“If those private insurers are paying half as much as it costs to deliver services in the hospital,” he said, “that hospital is not going to stay open.”
A 2024 study from the Kansas Hospital Association found that private insurers, or commercial payers, in the state paid less than payers in neighboring states. That left Kansas hospitals with fewer private dollars to help cover the costs of care for uninsured or underinsured patients.
And because private plans were covering less, patients were left carrying more bad debt, the study found, because they couldn’t afford out-of-pocket costs. Or they were avoiding care when they needed it, which ultimately drives up cost.
The closure of any rural hospital puts people’s health at risk. Not only are patients left with long drives to hospitals in an emergency, they also lose affiliated physician practices, laboratories and imaging services, which often puts preventive care in jeopardy.
“The bottom line for patients if they lose their hospital is that there’s always going to be a larger barrier for them to go seek care,” said Tom Mueller, director of the Kansas Center for Rural Health at the University of Kansas Medical Center. “It’s important to point out that rural folks are happy to drive for the most part. … But, regardless, if you’re talking about a 20-minute drive versus a two-hour drive, you might not go get that thing checked out.”
As a result, chances at early detection are missed. Screenings are postponed or avoided. And people’s health suffers.
Hope for rural transformation funds
Kansas hospitals are waiting for details about the funds the state has been awarded through the new $50 billion Rural Health Transformation Fund, which is being dolled out to states across the country for the next five years.
Missouri will receive $216 million during the 2026 fiscal year, the Centers for Medicare and Medicaid Services announced, while Kansas will receive $222 million.
Samuelson said the details of exactly what was funded from the Kansas proposal will be announced in coming days. But she expects the programs funded will help hospitals. It won’t mean an immediate influx of money, but it will mean a chance for the state to invest in shoring up rural hospitals.
And the industry hopes the funds will bring structural changes, like addressing root causes of disease, which would make care less expensive. And investing in the rural health workforce.
“It’s going to be changes that will be impactful and hopefully long-lived with regards to transformative care in rural areas,” Samuelson said.
Lucretia Stargell, CEO of Goodland Regional Medical Center and Rawlins County Health Center in northwest Kansas, said she hopes the new transformation fund drives rural hospitals to be more collaborative.
In May, her hospital brought oncology care back to Goodland one day a week by sharing the cost with other rural hospitals. Now cancer patients can see a doctor close to home rather than driving to Hays or other faraway cities.
It’s an example of how rural hospitals can bring care to the patients, Stargell said, but also help patients navigate finding specialist care in other places when necessary.
“Our big audacious goal is to be a medical home for the region, she said. “We want to help coordinate your care. We want to get you to Hays or Salina or Kansas City, but we want you back. It’s a complex world to navigate, and that’s our duty as a hospital to be part of that.”
Hospitals haven’t gotten to the point of being on the brink of closure overnight, and getting back to health won’t be simple either, Stargell said. But taking deliberate steps to create long-term change seems like the best approach, she said.
“If there were a quick fix,” she said, “hospitals wouldn’t be closing.”
This story was originally published by The Beacon, a fellow member of the KC Media Collective.
