Surging Red Ink Imperils Rural Maternity Care With Kansas as Ground Zero

Somewhere in rural Kansas tonight, a woman is going into labor — and the nearest hospital equipped to deliver her baby may be an hour away, if it hasn’t already shut its doors. A similar situation faces expectant mothers in dozens of other states, where the local labor and delivery unit has closed or is one bad budget year from doing so.A new analysis from the Center for Healthcare Quality and Payment Reform found that 720 rural hospitals — just under a third of all rural facilities nationwide — were at risk of closure as of May, with 294 of them in immediate jeopardy. A follow-up count in July showed the figure had gone down slightly, to roughly 700, with just over 260 hospitals in immediate danger.The shrinking headline number offers little comfort; it reflects fewer hospitals still standing, not fewer hospitals in trouble.The problem, according to the president and CEO of the Center for Healthcare Quality and Payment Reform, Harold Miller, comes down to who is footing the bill.“Hundreds of rural hospitals across the country are at risk of closing primarily because private insurance companies, including both commercial insurance plans and Medicare Advantage plans, pay rural hospitals less for services than what it costs the hospitals to deliver those services,” Mr. Miller tells The New York Sun.His organization’s own findings back that up: While losses on uninsured and Medicaid patients hurt, losses on privately insured patients are the biggest driver of red ink at hospitals now on the brink.Not every insurer agrees with that framing. For one, Blue Cross Blue Shield of Alabama has disputed the claim, arguing that government payers are the bigger drag. The insurer says its patients make up only a small share of the volume at the state’s rural hospitals, and that CHQPR overstates how much of the burden results from private plans. Mr. Miller, however, stands by the data and contends that it is not a story of mismanagement.“A payment that is sufficient to cover the cost of a service at a large hospital will not be adequate at a small rural hospital because it costs more to deliver health care services in rural communities,” Mr. Miller says, noting that “nearly three-quarters of the rural hospitals in Kansas are losing money and more than half are at risk of closing.”So what happens to the next mother in labor when three out of every four hospitals left standing in rural Kansas are already bleeding money?The Numbers Behind The CollapseMore than 40 percent of the nation’s rural hospitals lose money providing patient services, and nearly a third lost money overall in 2024 and 2025 once special pandemic-era federal assistance ran dry.A researcher with the Chartis Center for Rural Health, Billy Balfour, tells the Sun that the firm’s newest data puts the figure even higher.“Our most recent analysis showed that 41.2 percent are operating in the red,” Mr. Balfour explains, pointing out that the divide tracks closely with whether a state expanded Medicaid.“Our research has consistently shown that non-expansion states have not matched the financial performance of their expansion state peers. With non-expansion states, the percent operating in the red in our 2026 study, for example, is 52.2 percent.”In other words, hospitals in states that turned down federal Medicaid expansion are losing money at a much higher rate than hospitals in states that accepted it — roughly one in two, versus roughly one in three.Kansas is a non-expansion state, and the gap between what it costs to keep a small hospital open around the clock and what insurers actually pay has become difficult to close. Washington has tried to answer with money of its own. The Rural Health Transformation Program authorizes $50 billion over five years, distributed through the Centers for Medicare and Medicaid Services, with all 50 states applying and all 50 approved.Mr. Miller, however, is skeptical it will reach the hospitals that need it most.“The $10 billion per year in new funds under the Rural Health Transformation Program could go a long way to preventing the loss of services in rural areas if the money could be directed to the hospitals that are currently being underpaid for services to reduce or eliminate their financial losses,” he observes.But instead, he asserts, the Centers for Medicare and Medicaid Services has barred states from using the money to raise payment rates at all.“CMS is prohibiting states from using the funds to increase payments for health care services, even though the primary reason rural physician practices and hospitals are closing is that insurance plans pay them less than what it costs to deliver services in a small rural community,” Mr. Miller continues.CMS, for its part, characterizes the Rural Health Transformation Program as an investment in long-term fixes rather than a quick reimbursement patch. Yet, nothing on record directly answers Mr. Miller’s complaint about the payment-rate restrictions.States, Mr. Miller continues, can put no more than 15 percent of their allotment toward direct payments to providers, and there is no requirement that those providers even work in a rural area. His verdict on the technology investments the program favors is withering.“A phone app can’t deliver a baby, draw blood, or stitch a wound,” he says.Other Problems Factor InThe money crunch isn’t the only thing hollowing out rural care. A parallel workforce shortage is compounding it.“Rural hospitals are facing significant financial pressure from physician workforce shortages, Medicare physician payment that has not kept pace with inflation, and administrative burdens,” the immediate past president of the American Medical Association, Dr. Bobby Mukkamala, tells the Sun. “In Kansas, data shows three rural labor and delivery units have closed since 2020, only 35 percent of rural hospitals still provide labor and delivery services, and seven of those remaining units are at risk of closing.”Kansas, however, is not an outlier so much as an extreme version of a pattern playing out from the Gulf Coast to the Pacific Northwest .Chartis counts 417 hospitals nationally as vulnerable to closure this year — an improvement from 432 the year before — with Tennessee, Arkansas, Florida, Kansas and South Dakota carrying the heaviest loads.Kansas has seen 12 rural hospitals close or convert to a limited-service model since 2010, placing it among the five hardest-hit states in the country alongside Texas, Tennessee, Oklahoma and Mississippi.The nation’s leading physician group agrees the promised federal help won’t cover the coming shortfall.“The Rural Health Transformation Program is a welcome investment that will help strengthen rural health infrastructure, expand access to care, and support services such as telehealth, remote monitoring, and care coordination,” Dr. Mukkamala says.“While these investments are important, they will not fully offset the impact of anticipated Medicaid cuts and are only short-term investments.”Rural hospitals, he notes, serve a disproportionate share of Medicaid patients.Where The Maternity Wards Used To BeThe clearest measure of the crisis may be the disappearance of a service most Americans assume every hospital provides: delivering babies. Chartis has tracked the toll for more than a decade, and its newest analysis found that between 2011 and 2024, 331 rural hospitals — about 27 percent of the nation’s rural obstetric units — stopped offering OB.The founder and president of Every Mother Counts, Christy Turlington Burns, who was executive producer on the documentary “Perilous Passage: Birth in America,” highlights that the closures compound one another.“Rural hospitals are facing a perfect storm. Rising costs, provider shortages, and inadequate reimbursement, particularly through Medicaid, which finances more than 40 percent of all births in the U.S.,” Ms. Turlington Burns tells the Sun. “Without sustainable funding, hospitals are forced to make difficult decisions, often leaving families with fewer places to receive care and forcing them to travel dangerously long distances for care.”The consequence shows up in drive times, not just balance sheets.“In Kansas, the median drive to a hospital with labor and delivery services is 32 minutes, and that could grow if additional maternity units close,” Dr. Mukkamala notes.Mr. Miller concurs that the danger compounds with every extra mile.“In most cases, when a rural maternity unit closes, a woman will have to travel at least 30 minutes more than she would have otherwise to reach a hospital that has labor and delivery services,” he explains. “The farther that a woman has to travel after labor begins, the less likely she is to reach a hospital before she delivers.”For many maternal health advocates, it comes down to a matter of equity as much as geography.“Distance is one of the biggest barriers to accessing life-saving maternity care,” Mrs. Turlington Burns explains. “The farther care moves from where people live, the greater the barriers to safe, timely, equitable care.”As for the fix, many experts in the space worry that the current federal package — which pours $50 billion into rural health over five years but bars states from using that money to raise what hospitals get paid directly — doesn’t solve the problem.Mr. Miller puts a price tag on what would. Closing the gap for every at-risk hospital in the country, he says, would cost roughly $4 billion a year, about one-tenth of 1 percent of total national health care spending.Dr. Mukkamala points instead to legislation moving in Congress. The Physician-Led and Rural Access to Quality Care Act would ease a longstanding ban on physician-owned hospitals in rural areas, letting more of them open or expand. But the American Hospital Association opposes the measure, claiming that physician-owned hospitals cherry-pick well-insured patients and drain resources from community hospitals which are left with costlier care.Meanwhile, the Connected Moms Act, some experts say, would push Medicaid to cover remote monitoring devices — blood pressure cuffs, glucose monitors — so high-risk pregnant patients can be tracked from home.In addition, the Rural Obstetrics Readiness Act would fund training and equipment grants. As a result, emergency rooms without a labor and delivery unit would be better prepared when a mother in crisis walks through the door. Dr. Mukkamala also points to pathways that would let international medical graduates stay in the country if they practice in underserved communities.But Mrs. Turlington Burns emphasizes that money alone won’t fix the problem.“There isn’t a single solution, but we do know what works. We need to strengthen the maternity care workforce, invest in evidence-based, community-led models like midwifery and freestanding birth centers, and ensure hospitals have sustainable financing to provide consistent care,” she says. “When communities have the resources to deliver high-quality maternity care, mothers and families are healthier and better supported.”

Surging Red Ink Imperils Rural Maternity Care With Kansas as Ground Zero

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