Rural hospital closure crisis: Alabama health care system at risk

Rural hospitals are disappearing from America, leaving entire communities without access to critical health care. With half of them now struggling financially, the question becomes: Who will care for rural America when these hospitals are gone? This pressing question is at the heart of a new study conducted by Chartis Center for Rural Healthwhich details the unprecedented strain on rural health care as closures, financial pressures and workforce reductions develop into a national crisis.

For more than 15 years, rural hospitals have been struggling to survive. Now, with unrelenting pressure, declining reimbursement, and an aging, resource-poor population, the safety net for rural communities is eroding faster than ever.

At least 14 hospitals have closed in Alabama since 2010, mostly affecting rural areas. These closures were the result of financial difficulties due to insufficient Medicare and Medicaid reimbursement, high uninsured rates and the state’s decision not to expand Medicaid. This crisis has exacerbated health care affordability issues, with hospitals such as Randolph Medical Center, Hartselle Medical Center and Cooper Green-Mercy stopping inpatient and emergency services to reduce losses. Additionally, the closure of Thomasville Regional Medical Center in 2024 underscored the fragile state of rural healthcare as it lost critical federal support in the wake of the COVID-19 pandemic.

The situation continues to deteriorate, with more than a dozen more hospitals now under threat. Alabama’s reluctance to expand Medicaid has added financial pressure, especially to rural hospitals, since additional funds could ease some of these operational challenges. This trend of hospital closures results in many residents having to travel time for emergency care and specialty services, significantly impacting maternal health and overall access to timely health care throughout the state.

Key Findings

Growing deficit: Today, 50 percent of rural hospitals are operating in the red, a sharp jump from 43 percent last year. This marks the largest annual increase in rural hospital shortages in more than a decade, signaling an unsustainable trajectory unless action is taken soon.

Financial pressure on independent hospitals: Independent rural hospitals have been hit the hardest, with 55 percent struggling to remain solvent, compared with 42 percent of system hospitals. While joining the system provides some financial stability, it is far from a one-size-fits-all solution to the unique challenges facing rural service providers.

Growing Medicare Advantage Coverage: Enrollment in Medicare Advantage, a private insurance alternative to traditional Medicare, has grown 48 percent in rural areas, especially in states like Alabama and Georgia. However, Medicare Advantage payment structures and administrative complexities often result in rural health care providers facing fewer reimbursements and more red tape, straining already limited resources.

Increasing hospital closures and declining access to care

The study paints a troubling picture of rural health care, where closures and service cuts are accelerating at a critical rate.

Hospital closures and conversions: Since 2010, 167 rural hospitals have closed or transitioned to non-hospital models. Last year alone, 28 rural communities lost hospital care, exceeding the previous maximum set in 2020 and leaving residents without needed emergency and inpatient care.

Loss of Chemotherapy Services: Access to chemotherapy is rapidly declining, leaving cancer patients in rural communities with few life-saving treatment options. Between 2014 and 2022, 382 rural hospitals—nearly one in three—discontinued chemotherapy services. States like Texas, Alabama and Mississippi suffered some of the biggest losses, with nearly half of their rural hospitals ending chemotherapy services. This trend forces rural cancer patients to travel longer distances and face higher costs and delays in care, which can seriously impact their prognosis and quality of life.

Reduction of obstetric services: Midwifery services have been another casualty, with 267 rural hospitals cutting midwifery care between 2011 and 2021. travel further to obtain needed prenatal and maternity services.

Regional Differences and Impact of Medicaid Expansion

The study highlights stark regional differences, with non-Medicaid states facing greater financial instability among rural hospitals. Alabama, Florida and Kansas have some of the highest rates of unprofitable hospitals, with negative operating margins in Alabama affecting 74 percent of rural hospitals. In contrast, states that expand Medicaid have comparatively stronger financial stability in their rural health systems, illustrating how policy choices can influence health outcomes.

Why is this important

The rural health crisis extends far beyond rural areas. When communities lose their hospitals, it disrupts not only access to health care but also the local economy, since hospitals are often large employers. This crisis could eventually spread to urban areas as more rural patients are forced to seek care in already overburdened urban hospitals. The stability of health care across the country is linked to the health of rural hospitals, making this an issue relevant to all Americans.

The Medicare Advantage: A Mixed Blessing

The growth of Medicare Advantage in rural areas is complicating the financial situation for hospitals. In rural America, the popular program covers more than 50 percent of Medicare-eligible patients in some states, including Alabama and Georgia. However, reimbursement restrictions and additional administrative requirements create new challenges for health care providers who rely on the simpler, cost-based model of traditional Medicare.

Possible solutions and next steps

With nearly 420 rural hospitals considered vulnerable to closure, Chartis is calling for urgent action. Proposed measures include reducing the administrative burden of Medicare Advantage claims, revising Medicaid expansion policies and making changes to rural acute hospital regulations that could restore access to vital services in rural areas.

“The data reflects a sobering reality: unless systemic changes are enacted soon, we could see even more rural communities left without essential health services,” the report said, calling on national and local leaders to take action. Through targeted policies, increased funding and strategic realignment, America’s rural health network can find a path forward that ensures every community, no matter its location, has access to essential health care.