Article
The headline numbers
The Chartis Center for Rural Health released its annual state-by-state analysis on Feb. 10. It found 41.2% of rural hospitals operating at a loss, an improvement from 46% a year earlier. Its vulnerability index, which weighs factors such as consecutive years of losses and changes in net patient revenue, puts 417 rural hospitals at risk of closure, down from 432.
The gap between Medicaid expansion and non-expansion states remains wide. In expansion states, 34.9% of rural hospitals are in the red and the median operating margin is 2.9%. In non-expansion states, 52.2% are losing money and the median margin is negative 0.7%.
Risk is shifting, not shrinking
The national count masks sharp state movement. Tennessee’s share of vulnerable rural hospitals rose from 44% to 61%, and South Dakota’s from 28% to 42%. Texas has the largest number at risk with 50, followed by Kansas, Tennessee, Georgia and Mississippi. Since 2010, 206 rural hospitals have closed or converted to models without inpatient beds, including the rural emergency hospital designation.
Service lines are thinning too. Chartis counts 448 rural hospitals that stopped offering chemotherapy between 2014 and 2024 and 331 that ended obstetrics between 2011 and 2024.
Why transformation funds may not close the gap
The report lands as states begin spending the first year of the five-year, $50 billion Rural Health Transformation Program. Chartis reviewed 47 state applications and found every one included telehealth, with most also funding rural networks, behavioral health or chronic disease work. But direct provider payments are capped at 15% of a budget year’s funding and capital spending at 20%, which limits how much reaches hospital operating budgets.
Chartis also flagged a less obvious risk: eight applications propose certificate-of-need changes. Because outpatient care generates a median 85% of revenue at critical access hospitals and 77% at other rural facilities, new competitors for imaging, surgery or infusion volume could weaken the hospitals the program is meant to support.
Meanwhile, Chartis estimates recurring sequestration and bad debt policies cost rural hospitals roughly $690 million a year, and it projects about $140 billion in Medicaid-related losses under last year’s budget law beginning in 2027.
What leaders should do now
- Engage the state office running transformation funds. Network, telehealth and workforce grants are where most dollars will go; position partnerships to qualify.
- Watch certificate-of-need proposals. Model what a new ambulatory competitor would do to your outpatient margin.
- Stress-test for 2027. Build Medicaid scenarios now so service line decisions are deliberate, not forced.
Archive entry for Feb 11, 2026, added Nov. 11, 2026.