Data on Rural Hospitals

Sources of Profits and Losses at Rural Hospitals

This table shows how much of a rural hospital’s Total Margin (i.e., its overall profit or loss) was contributed by each of six major categories of revenue and costs. The percentages shown represent the average from the three most recent Cost Reports available as of July 2024, excluding 2020 because of the unusual changes in costs and revenues during the initial months of the coronavirus pandemic.

Definitions of the variables are provided below the table.

Information About the Data

The percentage shown for each category of patients/payers is the dollar amount of the profit/loss in that category divided by the hospital’s total expenses. This represents how much the hospital’s total percentage margin was increased or decreased by the profit or loss in that category. For example, if the amount shown for Medicare is -3%, that means the hospital’s Total Margin was three percentage points lower than it would have been if payments from Medicare had equaled the costs of services delivered to Medicare beneficiaries. The sum of the amounts from all six categories will be approximately equal to the Total Margin.

The amount that a payer contributes to the hospital’s total margin is affected by both (1) the size of the profit or loss on that payer’s patients and (2) the proportion of the hospital’s total services that are paid for by that payer. For example, if the hospital has a 10% loss on services to patients insured by Payer A and a 20% loss on services to patients insured by Payer B, but Payer A’s patients represent 50% of the hospital’s total services and Payer B’s patients represent only 5% of the hospital’s total services, then the loss on Payer A’s patients will reduce the hospital’s total margin by 5% (10% x 50%) while the loss on Payer B’s patients will only reduce the hospital’s total margin by 1% (20% x 5%).

• Medicare FFS represents the impact on the hospital’s total margin from profits or losses on hospital services delivered to patients on Original Medicare. (Services for Medicare Advantage patients are included in “Private and Other.”)
• Medicaid, CHIP, and Indigent represents profits or losses on services to patients enrolled in Medicaid, CHIP (the Children’s Health Insurance Program), and state or local indigent care programs.
• Uninsured Charity Care represents the loss on services to patients who do not have insurance and who met the hospital’s eligibility criteria for charity care.
• Bad Debt represents the loss from two different categories of patients:
  • patients with private insurance who cannot afford to pay cost-sharing amounts required by their insurance plans; and
  • patients without private insurance who cannot afford to pay the hospital’s charges and who do not qualify for charity care.
• Private and Other represents the hospital’s profit or loss based on the full “allowed amount” of payment for services delivered to (1) insured patients other than those with Original Medicare, Medicaid, CHIP, or other indigent care programs and (2) patients without insurance who did not qualify for charity care. The sum of the Bad Debt and Private and Other amounts represent the net profit or loss on these patients.
• Non-Patient Services represents the contribution to the total margin from sources that are not directly based on services delivered to patients, including local tax revenues, state government grants, federal pandemic assistance, and services such as parking, gift shops, and cafeterias.

Margins are not shown for Indian Health Service hospitals because they do not receive payments based on the number and types of services they deliver or report revenue in the same way as other hospitals do.

Total Expenses is based on the most recent Cost Report available.

Additional details on the methodology are available in the Methodology section.