A Comparison of Non-Operating Revenue between Rural and Urban Hospitals


Non-operating revenue (NOR) is an important source of hospital revenue; some hospitals are able to use NOR to offset operating losses, improve total margins, and remain profitable overall despite experiencing negative operating incomes. NOR is defined as revenue from sources other than patient care and activities closely related to patient care, is comprised of investment income, medical office rental revenue, government appropriations (such as state and local tax transfers and grants), and philanthropic sources. 

This study compares the relative percentage and composition of NOR among Critical Access Hospitals (CAHs), Rural Prospective Payment System (R-PPS) hospitals, and Urban Prospective Payment System (U-PPS) hospitals. Study data came from the Centers for Medicare & Medicaid Services (CMS) Healthcare Cost Report Information System (HCRIS) from 2011-2019. Given the financial vulnerability of rural hospitals, it is important for policymakers to monitor the composition of hospital revenue to identify financial risks that may threaten hospitals’ long-term viability.