Rural Hospital Closures: A Growing Crisis Threatens Workers’ Compensation Systems Nationwide 

• By: Nancy Germond
• September 16, 2025

The Scope of Rural Hospital Closures 

Rural hospital closures represent more than just statistics on a spreadsheet. These facilities often serve as the “center of smaller rural communities,” according to the Center for Healthcare Quality & Payment Reform. These institutions provide not only emergency care but also serve as significant employers and solid economic anchors. Today, an additional 700 rural hospitals face the risk of closure due to mounting financial challenges, with more than 300 facing imminent threats to their continued operation, according to the Center. 

Hospitals nationwide institutions face a stark reality. Both patient margins (profit from patient care) and total margins (profit from all revenue sources) steeply declined since 2020, with rural trends declining more dramatically than their urban counterparts. Rural hospitals are generally financially weaker and receive more federal support, making them particularly vulnerable to policy changes and budget cuts. 

A November 2022 study revealed that approximately 30% of all rural hospitals are at risk of closure in the “immediate or near future.” The geographic distribution of these closures tells a troubling story, with the majority occurring in the Midwest and eastern United States—regions that can least afford to lose healthcare infrastructure due to higher rates of chronic illnesses such as obesity and diabetes. 

The Five Pillars of Healthcare Access Under Threat 

According to the Workers’ Compensation Research Institute (WCRI), rural communities already face significantly less access to healthcare than major urban areas. Designed by Dr. Mark Holmes of the Sheps Center for Health Services Research at the University of North Carolina, the “5 A’s of Access” framework helps illustrate the challenges facing rural workers. Holmes spoke at the 2025 Workers’ Compensation Research Institute’s annual conference.  

Availability  Rural areas face severe shortages of medical providers, with urban areas having 78% more primary care physicians per capita and seven times as many specialty care physicians compared to rural regions. 

Accessibility  Physical access to healthcare facilities becomes increasingly difficult as hospitals close, with some workers needing to travel an additional 50 to 100 miles for emergency treatment. 

Affordability  The financial burden increases when workers must travel longer distances and seek care at more expensive urban facilities. 

Accommodation: Limited clinic hours and extended wait times become more common as remaining facilities become overburdened. 

Acceptability: Cultural and linguistic preferences may not be adequately addressed when workers must seek care outside their local communities. 

Direct Impacts on Workers’ Compensation Claims 

The closure of rural hospitals creates cascading challenges directly affecting the workers’ compensation systems and injured employees.  

Limited Access to Immediate Care 

When emergency services are unavailable locally, injured workers face delayed treatment. This often converts manageable injuries into severe medical conditions. This delay can lead to poorer health outcomes and will significantly increase medical expenses associated with workers’ compensation claims. These costs include higher payouts for permanent partial and permanent total disability benefits, travel costs and often higher medical costs when rural patients must treat in urban areas. 

Increased Travel Requirements and Their Associated Risks 

Rural injured workers may need to travel longer distances to access emergency or specialized care, creating multiple cost increases. Transportation expenses can increase substantially, and treatment delays can exacerbate existing injuries. Additionally, travel itself introduces new risks, including falls due to unfamiliar surroundings and increased chances of motor vehicle accidents, potentially creating additional compensable injuries. 

Ambulance Deserts Will Increase Response Times 

Ambulance deserts impact healthcare, defined as living more than 25 minutes from a stationed ambulance, especially in serious injuries requiring hospital transport. In the U.S., 4.5 million people live in an ambulance desert, with over half (2.3 million) in rural counties. 

Rural areas are much more likely to be ambulance deserts. Motor vehicle injury outcomes are worse in rural areas, according to Holmes, with a much higher fatality rate than in urban areas. Factors such as road conditions may account for some of that outcome. However, factors such as distance to hospitals and first-responder response times may also impact those outcomes.  

Rising Treatment Costs 

Rural hospital closures often force the transfer of treatment to urban or larger regional hospitals, which typically charge more for medical services due to their complex structure and broader service offerings. When rural workers require specialized care unavailable in their communities, they must seek treatment at these higher-cost facilities, driving up the average cost of workers’ compensation medical claims. 

Extended Recovery Timelines 

The impact on recovery times represents another critical challenge. Workers’ compensation claims that include wage replacement during recovery face higher costs across multiple categories: medical expenses, transportation, potential lodging, and inevitably slower return-to-work timelines. Additionally, travel risks, including car accidents or other incidents when outside the injured worker’s normal geography, may create a second compensable injury.  

Consider a welder recovering from a back injury who requires regular physical therapy sessions. Without nearby therapy options, the worker may face appointment delays or endure lengthy commutes for treatment. These delays slow recovery and decrease worker morale, potentially undermining the worker’s ability to promptly return to their job. 

The Mental Health Component 

Post-injury depression and mental health challenges represent an often-overlooked factor in workers’ compensation claims. According to Kaiser Family Foundation data from 2022, approximately 23% of the U.S. population received mental health support, with 19% taking prescription medication for mental health conditions.  

Generation Z adults and younger Millennials report being “completely overwhelmed by stress,” and any work-related injury can significantly add to normal life stressors. Mental health comorbidities, including anxiety, depression, and sleep dysfunction, have shown stronger associations with smaller functional recoveries than physical health comorbidities such as diabetes, hypertension, or obesity.  

Adding an injury on top of already existing depression or other mental health conditions can impact healing and return to work timelines. 

Economic Implications for Rural Industries 

Rural hospital closures place additional pressure on industries that form the backbone of rural economies—farms, ranches, factories, and energy producers. These employers rely on healthy, stable workforces to attract talent and maintain productivity. The absence of nearby healthcare facilities makes it increasingly difficult to attract and retain employees, particularly experienced older workers who comprise a significant portion of many rural workforces. 

The financial burden of rising workers’ compensation premiums and claim expenses may fall disproportionately on these industries. Employers struggling to cover increasing costs could face difficulties staying competitive in their markets, potentially leading to reduced hiring, job losses, and lower wages—perpetuating a cycle of economic decline in rural areas. 

Local Universities Stepping Forward to Help 

In Ohio in late 2023, the Ohio State University and Cleveland Area Hospital partnered to find solutions to rural healthcare challenges. Hopefully, other states may follow this model.  

Emerging Challenges from Private Equity Involvement 

The healthcare sector has become an attractive focus of private equity firms, which now own at least 130 rural hospitals. These firms typically focus on quick returns through cost-cutting, improved efficiency, and staff reductions—approaches that often clash with the longer-term needs of injured workers and community-focused care. 

Research finds that private equity medical facility ownership often leads to service cuts, increased out-of-network charges for patients, or complete closure when profitability doesn’t meet investor expectations. For workers’ compensation claim management, this creates added challenges in injury treatment, return to work and overall claim management. 

Current Response Strategies 

Despite these challenges, rural communities are developing innovative responses to hospital closures.  

Community Health Centers (CHCs) May Offer Expanded Services 

CHCs currently service 10 million rural residents and focus on primary care, prenatal services and mental health support. CHCs can help close gaps left by hospital and physician practice closures.  

Rural Emergency Hospital (REH) model initiatives  

These initiatives can help facilities remain open while adjusting or reducing their service offerings to maintain financial viability. 

Telehealth Acceleration  

Telehealth increases will be inevitable, though success varies by age group and internet access availability. 

Strategic Solutions for Workers’ Compensation Systems 

To address these mounting challenges, workers’ compensation carriers and employers should consider implementing several strategic approaches: 

Enhanced Provider Networks 

Developing robust network adequacy standards specifically for rural areas ensures injured workers have access to appropriate providers within reasonable travel distances. Regular network updates become crucial as provider availability can change rapidly in rural markets. 

More Reliance on Providers That Coordinate Worker Care 

There are a number of workers’ compensation providers who coordinate care for injured workers. While these providers are particularly helpful in managing traumatic injuries, more and more, rural healthcare will require these types of centralized services.  

Transportation and Mobile Services 

Initiatives such as mobile health clinics or employer-provided transportation can help bridge care gaps. Carriers should explore cost-sharing arrangements with Medicaid, the Veterans Administration, or other social services for transportation expenses. 

Technology Integration 

Expanding telehealth services for initial consultations and follow-up visits reduces travel burden while improving access to care. For workers reluctant to use technology, providing initial setup assistance can prove cost-effective. 

Case Management Enhancement 

Rural injuries require more intensive medical management and support from nurse case managers who are culturally fluent, speak workers’ native languages, and understand local healthcare resources. 

Second Injury Fund Utilization 

Approximately 30 states maintain Second Injury Funds to encourage employment of individuals with pre-existing conditions. These funds can provide reimbursement opportunities, as approximately half of all injuries could potentially qualify due to pre-existing conditions. 

The Proactive Path Forward 

Rural hospital closures represent a complex challenge requiring collaborative solutions from policymakers, healthcare providers, insurers, employers, and rural governance. The financial burden on workers’ compensation systems will continue growing without proactive intervention through higher medical costs, delayed treatments, extended recovery periods, and broader economic challenges faced by rural employers. 

Workers’ compensation providers must actively advocate for stable or increased funding for rural healthcare while developing proactive strategies rather than waiting for healthcare crises to unfold. This includes supporting sustainable funding mechanisms, advocating for adequate private insurance reimbursements, and backing government grants to cover unique rural healthcare costs. 

Community investment through subsidies, tax incentives, or partnerships with larger health systems can help stabilize healthcare infrastructure in rural areas. Educational outreach to community members, employers, and local leadership helps build understanding of the broader implications of hospital closures. 

Conclusion 

The closure of rural hospitals will present major obstacles for workers’ compensation systems, rural employers, and injured employees. Without effective action, these trends will continue widening healthcare disparities between urban and rural citizens while increasing workers’ compensation costs across the board. 

As one expert noted, “Rural providers have been under considerable financial stress, and it’s unlikely to end soon.” The more rapidly insurers develop strategies, strengthen medical networks and educate their adjusters to manage claims in this challenging environment, the sooner they can avoid higher loss costs that will lead to steep rate increases. Insurers must provide workers with excellent medical care, helping them heal faster, prevent post-injury complications, and return them to work within normal disability guidelines. 

Investing in rural community health isn’t optional—it’s essential for ensuring these regions continue to thrive. For workers’ compensation systems, supporting injured employees with timely and effective care extends beyond cost management to creating healthier, more resilient communities and workforces. The time for action is now, before this crisis deepens further and affects even more communities across rural America. 

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