Revenue Source Trends in Rural Hospitals

Purpose: Although hospitals have seen a shift from inpatient to outpatient settings in recent years, rural hospital payment policies continue to emphasize the provision of inpatient services over outpatient services. In order to support rural hospitals financially, newer and more effective payment models are urgently needed. The purpose of this research study was to provide lawmakers and stakeholders with a greater understanding regarding the role of outpatient care in rural hospitals by 1) evaluating how outpatient care as a source of revenue changed in rural hospitals between 2011 and 2019, and 2) analyzing the association of revenue source trends with rural hospital profitability. Methods: This research study included 1,345 rural hospitals across all U.S. census regions. We conducted a descriptive trend analysis to demonstrate changes in the percent of revenue coming from outpatient care from 2011 to 2019. To investigate the association of outpatient care with financial performance, we fit a multiple linear regression line to model the relationship between operating margins and the outpatient revenue to total patient revenue percent in rural hospitals. Findings: Among all rural hospitals in our sample, the average percent of revenue coming from outpatient services increased from 66.4% in 2011 to 74.4% in 2019. Similarly, this trend was observed when stratifying rural hospitals by census region and payment classification. Our regression analysis showed that the outpatient revenue share was a statistically significant predictor of profitability, as a one-percentage point increase in the percent of revenue coming from outpatient care was associated with a 0.057 percentage point increase in operating margin (95% CI: [0.038, 0.076]). Conclusions: Our findings suggest that outpatient care services are an important source of financing in rural hospitals, with outpatient revenue accounting for an increasingly larger percent of patient revenue. Future payment mechanisms emphasizing the provision of outpatient services may be more effective in sustaining financial viability in rural hospitals compared to payment models based on inpatient criteria.Bachelor of Science in Public Healt