Hospitals in rural America

The role of hospitals in the American health care system is changing rapidly, and some believe that hospitals may be replaced by networks of professionals and institutions tied together to coordinate care and promote health—the socalled virtual hospital. For many rural communities, however, the hospital has been the most effective form of health care delivery in the community. In the 1980s, as the number of rural hospitals closing their doors grew every year, expert observers of the health care sector believed that rural hospitals were perhaps an anachronism and that only those institutions that were large and integrated with other parts of the health care system would survive.1,2 The leading proposals for national health care financing reform from the White House and Congress in 1993 and 1994 did not provide much comfort for rural hospitals. By 1997, the reality of market changes overtook policy proposals; vertically integrated networks were a growing phenomenon, and the costsaving potential of managed care was being realized. Rural hospitals have survived in the present system partly because Medicare payment policies that were discriminatory to rural hospitals have been blunted by legislation and partly because there was a justification for the location and mission of hospitals in rural places. The number of closings dropped dramatically in 1994, and the dominant theme of rural hospital activities in the last half of the 1990s has been adaptation and innovation to meet the challenges of a changing market. Factors such as the rapid diffusion of new management techniques and the adoption of new structures and approaches to health care delivery have enabled rural hospitals to continue in their role as the local and regional centers of health care activity. This article reviews the numbers, types and structure of rural hospitals; describes their ownership and control; considers strategies for their survival; and discusses whether the quality of care that they provide equals that provided by urban institutions. Summary points The role and structure of rural hospitals is changing, but they continue to be important local and regional centers of health care activity Rural hospitals tend to depend more on Medicare and Medicaid patients Most rural hospitals are organized on a not-for-profit basis Rural hospitals make an important contribution to rural economies; expansion and diversification of the services that they offer will be important in their survival The quality of care provided in rural hospitals is generally equal to that provided by urban institutions, with some exceptions