Rural Emergency Hospitals: A Lifeline and Entry Point for Care
by Bruce Krider, MHA - American Healthcare Appraisal
Rural hospitals across the United States face unprecedented financial and operational challenges. Declining inpatient volumes, workforce shortages, and reimbursement pressures have left many facilities on the brink of closure. For communities that rely on these hospitals as their front door to care, the stakes could not be higher.
The Rural Emergency Hospital (REH) designation, effective January 1, 2023, offers a new pathway to preserve emergency and outpatient services. But REH is not the only option—and leaders must carefully evaluate alternatives to determine the best fit for their community.
🚑 The Alternatives for Rural Hospitals
1. Critical Access Hospital (CAH)
Overview: CAHs are small hospitals (≤25 beds) located in rural areas, reimbursed by Medicare on a cost-based system.
Pros:
Cost-based reimbursement stabilizes finances
Allows inpatient care, swing beds, and broad service offerings
Strong community identity as a “full hospital”
Cons:
Many hospitals no longer meet CAH eligibility criteria
Rising costs and declining inpatient volumes erode sustainability
Regulatory pressures make maintaining CAH status increasingly difficult
2. Rural Emergency Hospital (REH)
Overview: REHs provide 24/7 emergency services and outpatient care but no acute inpatient beds.
Pros:
Preserves emergency access for communities
Enhanced Medicare reimbursement for outpatient services
Monthly facility payment to stabilize finances
Flexibility to expand outpatient diagnostics, preventive care, and telehealth
Cons:
Loss of inpatient services may create care gaps
Requires strong transfer agreements with larger hospitals
Community perception challenges—patients may feel services are “downgraded”
3. Micro-Hospital or Freestanding Emergency Department
Overview: Small-scale facilities offering emergency and limited inpatient/outpatient services, often operated by larger health systems.
Pros:
Lower overhead compared to full hospitals
Can be strategically located to meet demand
Often backed by larger systems with resources
Cons:
May not qualify for federal support programs like REH
Limited scope of services
Requires significant capital investment and partnerships
4. Hospital Closure
Overview: Some facilities may choose to close entirely.
Pros:
Eliminates ongoing financial losses
Cons:
Devastating impact on community health and safety
Loss of jobs and economic stability
Longer travel times for emergency care, increasing mortality risk
⚖️ Comparing the Options
Model Emergency Services Inpatient Care Financial Support Community Impact CAH 24/7 ED Yes (≤25 beds) Cost-based reimbursement Strong, but eligibility shrinking REH 24/7 ED No (except SNF unit) Enhanced outpatient reimbursement + monthly payment Preserves emergency access, outpatient care Micro-Hospital 24/7 ED (limited) Limited beds Market-driven, not federally supported Dependent on partnerships Closure None None Eliminates losses Severe negative impact
🌍 The Path Forward
1. Conduct a Financial Feasibility Study
Compare CAH vs. REH reimbursement models
Assess outpatient demand and revenue potential
Model long-term sustainability under different scenarios
2. Engage the Community
Communicate clearly about what REH means
Emphasize that REHs are the entry point for emergency care and outpatient services
Hold town halls, publish FAQs, and involve local leaders in decision-making
3. Build Transfer Agreements
Partner with regional hospitals for inpatient care
Ensure seamless patient transfers to maintain continuity of care
Negotiate protocols for specialty services (cardiology, obstetrics, trauma)
4. Plan for Service Expansion
Explore outpatient diagnostics, preventive care, and telehealth
Position the REH as a hub for community health
Integrate behavioral health, chronic disease management, and wellness programs
5. Monitor Policy Developments
Stay informed on legislation that may expand REH capabilities (e.g., swing beds, obstetrics, 340B eligibility)
Track federal/state grants and workforce support programs
Advocate for rural health equity through associations and coalitions
📌 Additional Points Worth Addressing
Workforce Strategy: Recruiting and retaining nurses, physicians, and allied health professionals in rural areas
Technology Integration: Leveraging telehealth, remote monitoring, and digital health platforms to extend reach
Community Partnerships: Collaborating with schools, employers, and nonprofits to embed health services locally
Economic Impact: Hospitals as anchor institutions—loss or conversion affects housing, jobs, and local business
Risk Management: Preparing for natural disasters, pandemics, and supply chain disruptions in rural settings
Case Studies: Highlight successful REH conversions and lessons learned from early adopters
❓ Community FAQs
Q1: Will our hospital still have an emergency room if we convert to REH?
Yes. REHs are required to maintain a 24/7 emergency department, ensuring immediate access for urgent care.
Q2: What happens if I need to be admitted overnight?
REHs do not have acute inpatient beds. Patients requiring admission will be transferred to partner hospitals through established agreements.
Q3: Is this a downgrade for our community?
Not necessarily. While inpatient services are reduced, REHs expand outpatient care, diagnostics, and preventive services, often improving access to modern treatments.
Q4: How will this affect jobs?
Staffing models may shift, but outpatient expansion and telehealth can create new roles. Workforce planning is essential to minimize disruption.
Q5: What financial benefit does REH bring?
Hospitals receive enhanced reimbursement for outpatient services plus a monthly facility payment, stabilizing finances compared to declining inpatient revenue.
✅ Board & Leadership Checklist
Step 1: Financial Analysis
Compare CAH vs. REH reimbursement models
Project outpatient revenue potential
Step 2: Community Engagement
Host town halls and publish FAQs
Build trust through transparent communication
Step 3: Transfer Agreements
Formalize partnerships with regional hospitals
Ensure protocols for specialty care transfers
Step 4: Service Expansion
Add outpatient diagnostics, preventive care, and telehealth
Explore behavioral health and chronic disease programs
Step 5: Policy Monitoring
Track legislation on REH flexibility (swing beds, obstetrics, 340B)
Apply for grants and workforce support programs
✨ Conclusion
The REH designation is not a cure-all, but it is a lifeline. For many rural hospitals, it represents the only viable path to preserve emergency access and outpatient care. By investigating REH conversion now, leaders can ensure their communities retain a healthcare safety net and a front door to care—rather than facing the devastating consequences of closure.