The Characteristics of Communities Served by CAHs at High Risk of Financial Distress and Best Practices for CAHs in Environments Predictive of High Risk of Financial Distress

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Since 2010, there have been 83 rural hospital closures in the United States. Approximately 35% of these rural hospital closures were Critical Access Hospitals (CAHs) in eight different states. Hospital closure most frequently happens as a consequence of financial distress over a period of time. CAH financial distress and closures can intensify already challenging health and economic issues for the rural communities they serve. Communities served by CAHs and other rural hospitals tend to have older, sicker, and poorer populations with access to fewer health care professionals than those communities served by urban hospitals. These realities suggest that there may be a relationship between CAH financial distress and closure and the demographic and socioeconomic characteristics of the hospital-specific markets served.

This study furthered previous studies by focusing on factors unique to communities served by CAHs which are smaller and more rural than communities served by other types of rural hospitals. The three objectives of this project were:

  1. to identify CAHs that are located in challenging operating environments based on community characteristics known to negatively impact financial distress, but are performing at mid-low and low risk of financial distress based on our Financial Distress Index (FDI) model;
  2. to identify CAHs that performed at high risk of financial distress in a previous time period but that are currently performing at mid-low and low risk of financial distress; and
  3. to choose a sample of CAHs from those identified in objectives 1 and 2, and conduct interviews with CAH leadership to identify best practices related to financial and operational performance.