Rural squeeze: The economics of keeping hospitals open

Business Buzz host Ryan Frazier sat down with Jennifer Riley, CEO of Memorial Regional Health in Craig, Colorado, to examine the unsustainable financial math facing independent healthcare facilities.

— Unsustainable Margins: The baseline financial reality for rural healthcare is severe. According to data from the Colorado Hospital Association, 84% of rural hospitals in the state operated with unsustainable patient margins in 2024.

— The "Scale vs. Fixed Cost" Paradox: Rural facilities face the exact same massive capital and technology expenses as urban centers—an MRI machine costs the same in Craig as it does in Denver—but they lack the high patient volume required to efficiently distribute and absorb those fixed costs.

— The Government Payer Shortfall: A major structural driver of the crisis is reimbursement rates. Medicare and Medicaid now account for roughly 60% of hospital patients. However, these programs do not cover the actual cost of providing care, with Medicaid paying only 67 cents, and Medicare paying 72 cents, for every dollar the hospital spends. Adding to the strain, uncompensated charity care absorbed by Colorado hospitals surged to $533 million in 2025.

— The Erosion of Services: Rural hospitals are rarely closing their doors entirely in one fell swoop; instead, they are slowly eroding. A review of a statewide closure map since 2020 shows rural facilities are being forced to eliminate high-cost, critical services such as Labor and Delivery (L&D), behavioral health, and outpatient surgery just to keep the broader emergency facilities operational.