Declining patient volumes, workforce shortages, and chronic underpayment have left many on a lifeline. About half are operating at a loss, according to fiscal year 2023 data from the Pennsylvania Health Care Cost Containment Council. Another 17% are barely breaking even or operating with margins too low to make investments necessary to maintain facilities, enhance services, and secure long-term stability.

Eleven rural Pennsylvania hospitals have closed over the past two decades. Many have had to reduce services. Labor and delivery unit closures, for example, have resulted in a maternal health desert in north central and northwest Pennsylvania that’s the size of Connecticut. Many more have joined into health systems to avoid closure and preserve services in their communities.

Rural hospitals are not alone in feeling financial strain — more than half of the acute care hospitals statewide are operating in the red. But their unique challenges require unique solutions.

Hospitals in rural communities must be ready 24/7 to provide the same care as their urban and suburban counterparts, even though they see much fewer patients. That means they have the same high overhead costs but without the economies of scale and patient revenue to help offset them. Attracting and keeping the highly skilled health care professionals needed to maintain the services communities depend on — especially those with specialized training — is exceedingly difficult in rural areas.

Rural hospitals disproportionately care for patients who are covered by Medicare and Medicaid, both of which reimburse hospitals below what it costs to provide care. Statewide, Pennsylvania’s Medicaid program reimburses hospitals only 82 cents per dollar. For rural hospitals, that average is 74 cents. These underpayments put the rural hospitals that must absorb the loss at risk of having to close or reduce services.

This makes looming uncertainty over the future of federal Medicaid funding all the more concerning. The status quo is not sustainable for Pennsylvania’s rural hospitals; a cut would be catastrophic.

The loss of a rural hospital, or critical services like labor and delivery, can be devastating. Residents may travel an hour or longer to the next available hospital. Public health deteriorates. We hear from emergency responders how healthcare deserts strain their work to save lives. When people cannot access timely preventative care in their communities, chronic illnesses and other conditions worsen.

Healthcare deserts quickly turn into economic deserts. Long waits and further travel for care mean more missed time from work, job losses and increased costs for employers. Businesses invest in communities where they can access a healthy, local workforce and where people want to live. This makes healthcare access vital to economic development. Rural hospitals themselves are top job creators and economic anchors in their communities, supporting more than 80,000 jobs and $17 billion in economic impact statewide, both directly and through ripple effects.

We cannot have healthy vibrant communities in Pennsylvania without strong, financially stable hospitals. We all have a vested interest in advancing solutions.

First and foremost, we must align hospital payments with the actual cost of providing care. At a minimum, this means protecting current funding. Drastic and abrupt Medicaid cuts under consideration at the federal level will shutter some rural hospitals and service lines. We must also look at chronic underpayment from Medicaid and identify sustainable payment models for rural hospitals.

The traditional fee-for-service model — which pays hospitals based on patient volume — doesn’t make sense in rural areas. A rural labor and delivery unit still needs to maintain 24/7 readiness with specially trained teams, even if it delivers as many babies in a week as a suburban hospital might deliver in a day. A pilot program that ended last year flipped the payment model, providing 18 participating rural hospitals with more predictable funding to maintain services their communities need. We must move away from paying for volume and prioritize the creation of sustainable payment structures for rural hospitals to preserve care in our communities.

There are also steps that can be taken to ease some of rural hospitals’ operational challenges:

• Enacting targeted strategies — such as scholarships, student loan repayment and school-to-career pipelines — to attract and keep providers in rural communities.

• Alleviating certain state regulatory requirements that don’t make sense in rural settings and have no bearing on patient safety. Rural hospitals in particular are operating on a patchwork of outdated rules and exceptions, which inhibits innovation to solve unique challenges.

• Restoring legal reforms that stop medical liability cases involving rural providers from being moved to big cities with histories of higher verdicts. This practice is causing medical liability insurance premiums to skyrocket, discouraging providers from practicing in rural Pennsylvania and forcing rural hospitals to consider the future of high-risk services, especially obstetrics.

Rural communities are resilient. But we must prioritize the policy changes and investments necessary to help them thrive. The challenges facing rural healthcare are significant, but not insurmountable. Working together, we can protect the future of rural hospitals and ensure Pennsylvania’s rural communities are healthy, vibrant and economically competitive.

(Nicole Stallings is president and CEO of The Hospital and Healthsystem Association of Pennsylvania.)