Background Rural Hospitals and Areas In 2017, about 2,250 general acute care hospitals in the United States  were located in areas that met FORHP’s definition of rural; these rural  hospitals represented approximately 48 percent of hospitals nationwide  and 16 percent of inpatient beds. These hospitals were spread across the  84 percent of the United States land area that FORHP classified as rural,  and served the 18 percent of the United States population that lived in  these areas. While there are significant differences across rural areas and populations,  as a whole they differ from their urban counterparts in several ways. For  example, rural areas have the following characteristics: Higher percentage of elderly residents. In 2014, 18 percent of the  population was aged 65 or older in rural counties, compared with 14  percent in urban counties. Higher percentage of residents with limitations in activities  caused by chronic conditions. In 2010-2011, 18 percent of adults in  rural counties had limitations in activities caused by chronic health  conditions, compared with 13 percent in large, central urban  counties. Lower median household income. In 2014, the median household  income in rural counties was approximately $44,000, compared to  $58,000 in urban counties. Rural areas have also experienced several changes in recent years that  have exacerbated these differences. For example, according to research  by the United States Department of Agriculture, rural areas have  experienced the following changes: Decreasing population. From 2010 through 2015, the population in  rural areas declined, on average, by 0.07 percent per year, while the  population in urban areas increased, on average, by 0.9 percent per  year. Slow employment growth. From 2010 through 2015, rural  employment grew at 0.8 percent per year, less than half that of urban  areas (1.9 percent per year). Federal Response to  Rural Hospital Closures in  the 1980s Rural hospital closures are not a recent phenomenon. For example, we  previously reported that between 1985 and 1988, 140 rural hospitals  closed—approximately 5 percent of the rural hospitals in 1985. The  large number of closures in the 1980s was preceded by a change in how  Medicare paid hospitals. Specifically, in 1983, Medicare’s inpatient  prospective payment system was created, whereby predetermined rates  were set for each Medicare hospital discharge. The intent was to control  Medicare costs by giving hospitals financial incentives to deliver services  more efficiently and reduce unnecessary use of inpatient services by  paying a hospital a predetermined amount. However, one consequence  of the new payment system was that some small, rural hospitals  experienced large Medicare losses and increased financial distress. Partially in response to the number of rural hospital closures, FORHP was  established in 1987 to, among other things, advise the Secretary of HHS on the effects of current and proposed  policies on the financial viability of small rural hospitals and on access  to and quality of health care in rural areas; establish and maintain a clearinghouse for information on rural health  coordinate rural health activities within HHS; and administer grants and other instruments to fund activities to improve  health care in rural areas. HHS Administers  Multiple Payment  Policies and  Programs That  Support Rural  Hospitals and Funds  Research Centers to  Monitor Closures and  Access HHS Administers Payment  Polices and Programs  That Provide Financial  Support to Rural  Hospitals, Including  Medicare Rural Hospital  Payment Designations HHS officials identified several rural-specific HHS payment policies and  programs as providing key financial support to rural hospitals, and in turn,  rural residents’ access to hospital services. These key HHS payment  policies and programs may be placed into three categories: (1) Medicare  rural hospital payment designations; (2) rural grants, cooperative  agreements, and contracts, and (3) new approaches in rural health care  delivery and payment (see table 1). Medicare rural hospital payment designations. CMS administers  five rural hospital payment designations, in which rural or isolated  hospitals that meet specified eligibility criteria receive higher  reimbursement for hospital services than they otherwise would have  received under Medicare’s standard payment methodology. A rural  hospital may qualify as a Critical Access Hospital, Sole Community  Hospital, or Medicare Dependent Hospital—each of which has  different eligibility criteria and payment methodologies. With the  exception of Critical Access Hospitals, rural hospitals may also qualify  as Low Volume Hospitals and Rural Referral Centers, in which eligible  hospitals receive additional payments or exemptions. The largest of  the five designations is the Critical Access Hospital program, which  represented 56 percent of rural hospitals in 2017 and pays eligible  small, rural hospitals based on their reported costs (instead of the  standard rates under the inpatient prospective payment system). (See  app. I, table 2, for a description of each of the five Medicare rural  hospital payment designations.) CMS was unable to provide  estimates of the additional Medicare payments rural hospitals  received from each designation in 2017. According to CMS officials,  CMS generally does not model the amount of additional Medicare  payments resulting from rural hospital payment designations, except  in years when there is a related payment policy change going through  rulemaking. Rural grants, cooperative agreements, and contracts. FORHP  administers multiple grant programs, cooperative agreements, and  contracts that provide funding and technical assistance to rural  hospitals. The largest of these is the Medicare Rural Hospital  Flexibility grant program, in which FORHP provides funds to states to  support Critical Access Hospitals to stabilize their finances, foster  innovative models of care, and support other improvement activities.  In 2017, 45 states received $25 million in Flex grants. FORHP officials  noted that they can provide information to help states determine how  to best target Flex grant funds, as there is not enough funding to  financially assist all Critical Access Hospitals that are at risk of  closing. (See app. I, table 3, for a description of the rural grants, and  cooperative agreements and contracts identified by HHS officials.) New approaches in rural health care delivery and payment. CMS’s Center for Medicare & Medicaid Innovation (Innovation Center)  tests new ways to deliver and pay for health care—including some  focused on rural areas—with the goal of reducing spending and  preserving or enhancing the quality of care for beneficiaries enrolled  in Medicare, Medicaid, and the Children’s Health Insurance  Program. As of June 2018, the largest of these rural models and  demonstrations was Medicare’s Accountable Care Organization  Investment Model. Groups of providers in rural and underserved  areas participating in this model, potentially including small hospitals,  agree to be held accountable for the cost and quality of care to their  Medicare patients. The model tests providing pre-paid shared savings  as an incentive for providers in rural and underserved areas to form  Accountable Care Organizations and for these organizations to  transition to arrangements with greater accountability for financial  performance. For fiscal years 2012 through 2018, $96 million had  been obligated to organizations participating in the model. Forty-five  Accountable Care Organizations were participating in this model as of  2018. (See app. I, table 4, for a description of the new approaches  in rural health care delivery and payment identified by HHS officials.) In addition to the HHS payment policies and programs specifically  targeting rural areas, HHS officials also identified broader payment  policies and programs that they stated can provide key support to rural  hospitals and rural residents’ access to hospital services. These HHS  payment policies and programs may be placed in four categories: Medicare and Medicaid base payments. These consist of the  standard payments for hospitals services. Medicare and Medicaid uncompensated care payments. Both  Medicare and Medicaid provide multiple types of additional payments  to support hospitals that incur costs for services provided to uninsured  and other low-income individuals for which the hospitals are not fully  compensated. Medicare also provides bad debt payments to hospitals to reimburse them for a portion of Medicare’s beneficiaries’ unpaid  deductibles and coinsurance, as long as the hospital makes a  reasonable effort to collect the unpaid amounts. Other targeted HHS payment policies and programs. HHS  administers other targeted payment policies and programs that  support specific types of providers and areas, including, but not  limited to, rural hospitals and areas. In particular, the Health  Resources & Services Administration, an HHS agency, administers a  drug discount program targeted at certain hospitals and other safety  net providers. In addition, CMS administers bonus payments for  certain physician services provided to Medicare beneficiaries in areas  with a shortage of health professionals. State Innovation Models Initiative. The Center for Medicare &  Medicaid Innovation’s State Innovation Models aim to achieve better  quality of care, lower costs, and improve health for the population of  the participating states or territory. Some states’ plans include testing  new delivery and payment models specifically targeting rural areas. HHS Funds Research  Centers That Monitor  Rural Hospital Closures  and Study Access HHS monitors rural hospitals’ financial viability and rural residents’ access  to hospital services, primarily by funding rural health research centers that  track rural hospital closures and study rural residents’ access to hospital  services. To monitor rural hospitals’ financial viability, HHS funds and conducts  several activities: Tracking rural hospital closures and monitoring profitability. The  North Carolina rural health research center, a FORHP-funded rural  health research center, tracks rural hospital closures and monitors  rural hospitals’ profitability and other financial indicators. North  Carolina’s researchers identify rural hospital closures through a multi- party agreement with FORHP, the American Hospital Association, and  the National Rural Health Association, each of which alerts the  research center once one learns about a closure. Research center  staff then confirm the closure and ascertain whether the hospital  converted to another facility type by searching the hospital website  and calling a community leader, such as the mayor. The North  Carolina rural health research center publishes a list of rural hospital  closures since 2010 on its website. It also publishes reports on rural  hospitals’ profitability, including the extent to which profitability varies  by rural hospitals’ characteristics, and how rural hospitals’ profitability  compares to the profitability of their urban counterparts. Monitoring Critical Access Hospitals’ financial indicators. The  North Carolina rural health research center, through its role as part of  the Flex Monitoring Team, develops and monitors various financial  indicators for Critical Access Hospitals. Using the hospitals’  Medicare cost reports, the research center currently monitors 22  financial indicators under 6 domains—profitability, liquidity, capital  structure, revenue, cost, and utilization. These financial indicator data  are available to every Critical Access Hospital through an online tool  that also helps those hospitals compare their financial performance to  peer hospitals. The Flex Monitoring Team also publishes state-level  summary data on Critical Access Hospitals’ finances that are available  on its website. HHS also reviews and estimates the financial effect of policy changes on  rural hospitals. In particular, FORHP officials review proposed and final  rules for Medicare, Medicaid, and the Affordable Care Act’s health  insurance exchanges to identify concerns from a rural health perspective.  Drawing on the research it funds, FORHP officials may suggest policy  modifications to CMS, such as exempting certain Medicare rural hospital  designations from a proposed policy change. In addition to FORHP  officials’ review, as required by statute, CMS conducts regulatory impact  assessments that estimate the effect of policy changes on payments to  hospitals, including small rural hospitals, and publishes key results as part  of proposed and final rules. For example, as part of the fiscal year 2018  final rule on Medicare payment for hospital inpatient services, CMS  estimated that the expiration of the Medicare Dependent Hospital  designation would have decreased the payments to rural hospitals with  that designation by 0.9 percent, or approximately $119 million.  Subsequent to the final rule, the Medicare Dependent Hospital and Low  Volume Hospital designations were both extended. To monitor rural residents’ access to hospital services, HHS relies on  research conducted by the FORHP-funded research centers. Examples  of recent research on rural residents’ access to hospital services  conducted by FORHP-funded research centers include the following: Research on rural residents’ access to hospitals. In 2018 the  North Carolina rural health research center published an analysis of  populations in rural counties without access to an acute care hospital  or other types of primary care facilities. North Carolina’s researchers  estimated that about 4.4 million rural residents currently live in a  county without an acute care hospital. Research on access to specific hospital services. The Minnesota  rural health research center conducted a body of research on  declining access to obstetric services in rural counties. These  researchers found that between 2004 and 2014, the percent of rural  counties without hospital obstetric services increased from 45 to 54  percent, through a combination of hospital and obstetric-unit  closures. Research on options for ensuring rural residents’ access after a  hospital closure. The Iowa rural health research center published a  summary of currently available options for ensuring rural residents’  access to hospital services after a hospital closure, and additional  policy options under consideration. The National Advisory  Committee on Rural Health and Human Services, a 21-member  citizens’ panel of nationally recognized rural health experts that  advises HHS, also examined this topic, with a focus on alternative  models to preserve rural residents’ access to emergency care in light  of the recent surge in rural hospital closures. The committee noted  that payments and grants to support rural hospitals were largely  effective and stabilized rural hospital financial operations until 2013,  when a new wave of rural hospital closures began. The report  included recommendations regarding the design of alternative  models, including that HHS seek public comments on the use of a   combination of geographic distance and demographic or social  determinants of health when setting eligibility criteria. To supplement the monitoring by FORHP-funded research centers,  FORHP officials also track recent rural developments and reports from  rural health stakeholders. FORHP officials said this monitoring adds a  qualitative component to the quantitative research conducted by research  centers. In particular, these activities often provide the first notice of a  rural hospital closure or pending closure, and also help track changes to  the status of former hospitals over time. HHS Uses the Results of  Its Monitoring Activities to  Inform Future Research  and Grant Awards, and  Disseminates This  Information HHS uses the results of its monitoring activities on rural hospitals’  financial viability and rural residents’ access to inform related research,  primarily conducted by HHS-funded research centers, and to determine  future areas of research. For example, the North Carolina rural health  research center has used the list of rural hospital closures it compiles and  its monitoring of profitability to conduct research on predictors of rural  hospitals’ financial distress. In addition, FORHP officials stated that,  based on this monitoring, they have added topics to research centers’  agendas for subsequent years to gather more information on regulatory  changes identified in its review of policy changes. Each year, specific  research projects for the rural health research center are selected jointly  by the center directors and FORHP. Topics are selected to have a timely  impact on policy debates and decisions at both federal and state levels.  Examples of added topics include North Carolina’s research on the  financial importance of the Sole Community Hospital and Low Volume  Hospital designations and Iowa’s research on the engagement of rural  providers in Accountable Care Organizations. HHS has also used the results of its monitoring activities to update the  types of services offered by certain grants and create new cooperative  agreements for technical assistance. Specifically, for fiscal year 2016,  FORHP officials updated the list of activities that Rural Health Network  Development Planning grantees can spend funds on to include  implementing innovative solutions to alleviate the loss of local services  and enhance access to care in communities that have or are at risk of  losing their local hospital. According to FORHP officials, the addition of  this activity to the scope of the grant led to 11 of the 47 applicants from  fiscal years 2016 and 2017 to come from rural communities with a recent  rural hospital closure or perceived risk of closure. As another example, in  response to increased funding, in 2018 FORHP announced a new  cooperative agreement to provide targeted in-depth assistance to  vulnerable rural hospitals within communities struggling to maintain health  care services. The awardee of the Vulnerable Rural Hospitals Assistance  Program must work with vulnerable hospitals and their communities on  ways to ensure hospitals and communities can keep needed care locally,  whether it is with a more limited set of services provided by the hospital,  or by exploring other mechanisms for meeting community health care  needs. FORHP disseminates the results of this research and successful rural  health grants and other projects by funding cooperative agreements to  maintain clearinghouses of information about rural health issues. These  clearinghouses were originally designed to efficiently disseminate  research findings from rural health research centers to the public and to  help rural communities identify opportunities and information to provide  better healthcare to their residents. According to one of these  clearinghouses, since then, the focus has grown to developing evidence- based resources on rural health to share what works in rural  communities, including toolkits and case studies. Recent Increases in  Rural Hospital  Closures Have  Disproportionately  Occurred in the  South, With Multiple  Factors Likely  Contributing to These  Closures From 2013 through 2017,  More than Twice as Many  Rural Hospitals Closed  than in the Prior 5 Years Our analysis of data from the North Carolina rural health research center  and CMS shows that, from 2013 through 2017, 64 of the approximately  2400 rural hospitals in the United States closed. These 64 rural hospital  closures represented the following: More than twice the number of rural hospitals that closed during  the prior 5-year period. From 2008 through 2012, 31 rural hospitals  closed (see fig. 1). More than the share of urban hospitals that closed. The 64 rural  hospital closures from 2013 through 2017—approximately 3 percent  of all rural hospitals in 2013—exceeded the 49 urban hospital  closures during the same time period—approximately 2 percent of all  urban hospitals in 2013. More than the number of rural hospitals that opened. The 42 rural  hospitals closed from 2014 through 2016 exceeded the 3 rural  hospitals opened during the same time period. Approximately half of the rural hospitals that closed from 2013 through  2017—47 percent—ceased to provide any type of services. The  remaining hospitals that closed during this period converted to other  facility types, providing more limited or different services, such as urgent  care, emergency care, outpatient care, or primary care. Rural Hospitals with  Certain Characteristics— Including Those Located  in the South—Accounted  for a Disproportionate  Share of Closures from  2013 through 2017 Our analysis of data from the North Carolina rural health research center  and CMS shows that rural hospitals with certain characteristics—including  those located in the South—accounted for a disproportionate share of the  64 closures that occurred from 2013 through 2017. Geography. Rural hospitals located in the South represented 38  percent of the rural hospitals in 2013, but accounted for 77 percent of  the rural hospital closures from 2013 through 2017 (see fig. 2). Texas,  one southern state, represented 7 percent of the rural hospitals in  2013, but accounted for 22 percent of the rural hospitals closures from  2013 through 2017. Medicare rural hospital payment designations. Medicare  Dependent Hospitals – one of three Medicare rural hospital payment  designations in which hospitals were eligible to receive a payment  rate other than standard Medicare inpatient payment rate – were  disproportionately represented among hospital closures. Specifically,  Medicare Dependent Hospitals represented 9 percent of the rural  hospitals in 2013, but accounted for 25 percent of the rural hospital  closures from 2013 through 2017. Rural hospitals that did not receive  one of these three Medicare rural hospital payment designations also  represented a disproportionate share of the closures (see fig. 3). In  addition, hospitals designated as Low Volume Hospitals had a  disproportionate share of the rural hospital closures. Ownership. For-profit rural hospitals represented 11 percent of the  rural hospitals in 2013, but accounted for 36 percent of the rural  hospital closures from 2013 through 2017 (see fig. 4). According to  literature we reviewed, hospitals with for-profit status had a higher  probability of financial distress and were more likely to close. For  example, a 2017 study found that for-profit hospitals were more than  twice as likely to experience financial distress relative to government- owned and non-profit hospitals from 2000 through 2013. Bed size. Rural hospitals with between 26 and 49 inpatient beds  represented 11 percent of the rural hospitals in 2013, but accounted  for 23 percent of the rural hospital closures from 2013 through 2017.  Critical Access Hospitals have 25 acute inpatient beds or less and  make up a majority of the rural hospitals, but were less likely than  other rural hospitals to close. FORHP officials identified the Critical  Access Hospital payment designation – in which Medicare pays  designated hospitals based on their costs – paired with the related  Medicare Rural Hospital Flexibility grant program as the most effective  HHS payment policy and program to support rural hospitals’ financial  viability and rural residents’ access to hospital services. Fewer Patients Seeking  Inpatient Care and  Reductions in Medicare  Payments Have Likely  Contributed to Rural  Hospital Closures According to literature we reviewed and stakeholders we interviewed,  rural hospital closures were generally preceded and caused by financial  distress. In particular, rural hospitals that closed typically had negative  margins which made it difficult to cover their fixed costs. For example,  one 2016 study found that rural hospitals that closed from 2010 through  2014 had a median operating margin of -7.41 percent in 2009. In contrast,  rural hospitals that remained open during the same time period had a  median operating margin of 2.00 percent in 2009. In addition, there is  evidence that for-profit hospitals have been more sensitive to changes in  profitability and more likely to experience financial distress, which could  explain the disproportionate number of closures among rural hospitals  with for-profit ownership type. The literature we reviewed and stakeholders we interviewed identified  multiple factors that likely contributed to increased financial distress and  closures among rural hospitals. One such factor was a decrease in  patients seeking inpatient care at rural hospitals due to the following:  Increased competition for the small volume of rural residents.  Rural residents may choose to obtain services from other health care  providers separate from the local rural hospital, for example from an  increasing number of federally qualified health centers or newer  hospital systems outside of the area. The competition for the small  volume of rural residents between rural hospitals and other health  care providers potentially increased due to the shift to paying for value  instead of volume, and technology changes. This increased  competition for a small volume of rural residents could explain  disproportionate closures among hospitals receiving the Low Volume  Hospital Medicare payment designation, hospitals that by definition  have a low Medicare volume and that research has found have lower  margins than other rural hospitals. In addition, representatives from  the American Hospital Association told us that technological advances  have allowed more services to be provided in outpatient settings.  For example, changes in health care technology have expanded the  provision of outpatient surgical procedures. Declining rural population. The years 2010 through 2016 marked  the first recorded period of rural population decline. According to  literature we reviewed and stakeholders we interviewed, the recent  population decline in rural areas was likely associated with the recent  decline in rural residents seeking inpatient services. Another factor highlighted by literature we reviewed and stakeholders we  interviewed as contributing to rural hospitals’ increased financial distress  was across-the-board Medicare payment reductions. Rural hospitals are  sensitive to changes to Medicare payments because, on average,  Medicare accounted for approximately 46 percent of their gross patient  revenues in 2016. A 2016 study found that Medicare Dependent  Hospitals’ operating margins decreased each year from 2012 through  2014, which could explain the disproportionate number of closures among  the Medicare Dependent Hospital payment designation. The literature  we reviewed and stakeholders we interviewed highlighted the recent  Medicare payments cuts as contributing to rural hospital closures, which  included the following: Reductions in nearly all Medicare reimbursements. Under  sequestration – the cancellation of budgetary resources under  presidential order implemented pursuant to the Balanced Budget and  Emergency Deficit Control Act of 1985, as amended – each fiscal year  since 2013, nearly all Medicare’s budget authority is subject to a  reduction not exceeding 2 percent, which is implemented through  reductions in payment amounts. According to stakeholders we  interviewed, these payment reductions have contributed to negative  margins for rural hospitals. Reductions in Medicare bad debt payments. Under the Middle  Class Tax Relief and Job Creation Act of 2012, Medicare bad debt  reimbursements for hospitals were reduced beginning in fiscal year  2013. According to stakeholders, Medicare bad debt cuts have been  one of the most important factors contributing to the recent increase in  rural hospital closures. The literature we reviewed and stakeholders we interviewed also  identified factors that likely strengthened the financial viability of rural  hospitals. Chief among these factors was the increased Medicaid  eligibility and enrollment under the Patient Protection and Affordable Care  Act. A 2018 study found that Medicaid expansion was associated with  improved hospital financial performance and substantially lower likelihood  of closure, especially in rural markets and counties with large numbers of  uninsured adults before Medicaid expansion. Another 2017 study found  that from 2008-2009 and 2014-2015 the drop in uninsured rates  corresponded with states’ decisions to expand Medicaid on or before  January 1, 2014. The increase in Medicaid coverage and decline in  uninsured were both largest in the small towns and rural areas of those  expansion states. Additionally, our analysis of data from the North  Carolina rural health research center and CMS shows that from 2013  through 2017, rural hospitals in states that had expanded Medicaid as of  April 2018 were less likely to close compared with rural hospitals in states  that had not expanded Medicaid (see fig. 5). Agency Comments We provided a draft of this report to HHS for comment. The Department  provided technical comments, which we incorporated as appropriate. As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies of this report to the  appropriate congressional committees, the Secretary of Health and  Human Services, the Administrator of Health Resources & Services  Administration, the Administrator of CMS, and other interested parties. In  addition, the report is available at no charge on the GAO website at  http://www.gao.gov. If you or your staffs have any questions about this report, please contact  me at (202) 512-7114 or cosgrovej@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix II. Appendix I: Rural-Specific Payment Policies  and Programs That Provide Key Support to  Rural Hospitals Officials from the Department of Health and Human Services (HHS)  identified several rural-specific HHS payment policies and programs as  providing key support to rural hospitals, and in turn, rural residents’  access to hospital services. These key HHS payment policies and  programs may be placed into three categories: Medicare rural hospital payment designations (table 2); Rural grants, cooperative agreements and contracts (table 3); and New approaches in rural health care delivery and payment (table 4). Appendix II: GAO Contact and Staff  Acknowledgments GAO Contact Staff  Acknowledgments In addition to the contact named above, Greg Giusto (Assistant Director),  Alison Binkowski (Analyst-in-Charge), George Bogart, Zhi Boon, Leia  Dickerson, Krister Friday, Mike Hoffman, Peter Mann-King, Beth  Morrison, Vikki Porter, Merrile Sing, and Chris Woika made key  contributions to this report.
Research has shown that hospital closures can affect rural residents' access to health care services and that certain rural residents—particularly those who are elderly and low income—may be especially affected by rural hospital closures. This report describes (1) how HHS supports and monitors rural hospitals' financial viability and rural residents' access to hospital services and (2) the number and characteristics of rural hospitals that have closed in recent years and what is known about the factors that have contributed to those closures. GAO reviewed documents and interviewed officials from HHS and HHS-funded research centers; analyzed data compiled by HHS and an HHS-funded research center, with a focus on 2013 through 2017—the most recent year with complete data; reviewed relevant literature; and interviewed experts and stakeholders. GAO identified hospitals as rural if they met the Federal Office of Rural Health Policy's definition of rural. GAO provided a draft of this report to HHS for comment. The Department provided technical comments, which GAO incorporated as appropriate. The Department of Health and Human Services (HHS) administers multiple payment policies and programs that provide financial support for rural hospitals and funds research centers to monitor closures and study access. Among the payment policies administered by HHS are special payment designations for rural hospitals in which rural hospitals that meet certain criteria receive higher reimbursements for hospital services than they otherwise would receive under Medicare's standard payment methodology. HHS-funded research centers monitor rural hospitals' profitability and other financial indicators, and study access to facilities and specific services. HHS uses the results of monitoring activities to inform future areas of research and disseminate information. GAO's analysis of data from HHS and an HHS-funded research center shows that 64 rural hospitals closed from 2013 through 2017. This represents approximately 3 percent of all the rural hospitals in 2013 and more than twice the number of closures of the prior 5-year period. GAO's analysis further shows that rural hospital closures disproportionately occurred in the South, among for-profit hospitals, and among hospitals that received the Medicare Dependent Hospital payment designation, one of the special Medicare payment designations for rural hospitals. According to literature GAO reviewed and stakeholders GAO interviewed, rural hospital closures were generally preceded and caused by financial distress. In particular, rural hospitals that closed typically had negative margins that made it difficult to cover their fixed costs. According to these sources, financial distress has been exacerbated in recent years by multiple factors, including the decrease in patients seeking inpatient care and across-the-board Medicare payment reductions. In contrast, according to the literature GAO reviewed and stakeholders GAO interviewed, rural hospitals located in states that increased Medicaid eligibility and enrollment experienced fewer closures.