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Without key policy reforms, Rural Emergency Hospitals’ long-term survival and patient access is at jeopardy, says this CEO.

Editor’s Note: Bappa Mukherji is the CEO of Java Medical Group, a leading hospital management company that partners with rural hospitals nationwide to ensure quality patient care. He can be reached at bappa@javamedicalgroup.com.

More than 140 rural hospitals in the U.S. have closed since 2010. That’s more than one hospital per month for over a decade—leaving entire counties without lifesaving care.

In response, Congress created the Rural Emergency Hospital (REH) designation. These hospitals are designed to offer 24/7 emergency and outpatient services without the full inpatient footprint and help facilities remain open in regions where traditional hospital models no longer work.

REHs still face many of the systemic challenges that forced previous closures. The constraints that led to the widespread closure of rural hospitals—low patient volumes, disproportionate reliance on government payors, and high operational costs—still threaten the sustainability of REHs without targeted policy support and ongoing financial investment.

The REH reality: How to ensure success for rural hospitals

REHs were designed to help small facilities stay open by focusing on emergency and outpatient care, but rural hospitals still grapple with low patient volumes, workforce shortages, and aging infrastructure. Without support, REHs are simply not viable in the long run. What they need now are smart, targeted policy changes.

The following proposals are designed to address immediate financial and operational barriers that threaten rural hospital viability. Without these reforms, patients will continue to face long ambulance rides, delayed treatments, and worsening outcomes, all because the system wasn’t designed with rural communities in mind.

Expand 340B eligibility to REHs. The 340B Drug Pricing Program allows eligible providers to purchase outpatient drugs at steep discounts, helping offset the high cost of uncompensated care. REHs are currently excluded from this program, but expanding eligibility increases significant savings on medications and allows hospitals to reinvest savings into additional services and staffing needs. Given REHs’ small patient base, the budget impact would be minimal, especially compared to the cost of letting these hospitals fail. 340B matters for REHs because it helps cut drug costs, frees up money for other essential services, and ensures they’re treated fairly like other rural hospitals.

Allow swing beds for post-acute flexibility. Swing beds let rural hospitals shift beds from acute care to post-acute services, an essential solution in regions that lack skilled nursing options. Allowing REHs to operate with swing beds would allow for new revenue streams and reduced patient transfers, better continuity of care for patients, and optimized use of staff and facility space. Concerns about the scope of services at REHs can be addressed through clear regulations and transparent reporting. Allowing swing beds ensures REHs meet real community needs without overstepping their role.

Permit limited inpatient stays. Currently, REHs cannot admit patients for inpatient care, even when a short stay would prevent unnecessary transport or hospital overload. Regulatory changes for inpatient stays are necessary to reduce the burden on rural EMS systems, improve patient experience and access to key services, and relieve urban hospital strain from low-acuity rural cases. Allowing a small number of inpatient beds with strong oversight helps REHs stay true to their emergency care mission, while improving local access and easing the burden on overcrowded urban hospitals.

Beyond core reforms, REHs need broader support to thrive. Expanding telehealth can improve access to specialists and reduce unnecessary transfers. Rural-specific workforce incentives like loan forgiveness can help attract and retain clinicians. With growing behavioral health needs, REHs should be able to use 340B savings and swing bed flexibility to offer addiction treatment and geropsychiatric care. Finally, REHs that provide ambulance services should receive cost-based reimbursement, similar to Critical Access Hospitals, to ensure long-term resilience.

REHs can be more than a stopgap. They can be sustainable, community-based anchors for care if given the tools to succeed. By expanding access to 340B savings, enabling swing bed use and permitting short inpatient stays, policymakers can ensure REHs deliver on their mission.

These targeted reforms won’t just stabilize facilities, they’ll strengthen communities and in many cases, they’ll save lives.

Editor's note: Care to share your view? HealthLeaders accepts original thought leadership articles from healthcare industry leaders in active executive roles at payer and provider organizations. These may include case studies, research, and guest editorials. We neither accept payment nor offer compensation for contributed content.

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