Abstract
PURPOSE: Rural hospitals face persistent financial challenges that often threaten their survival. To address this, the 2023 "Rural Emergency Hospital" (REH) designation offers Critical Access Hospitals and hospitals with fewer than 50 beds enhanced Medicare reimbursement and annual facility payments if they discontinue inpatient services while maintaining outpatient care and a 24-hour emergency department. This study evaluates the characteristics of hospitals that choose REH conversion and examines the perceived community impact of the change. METHODS: We analyze Centers for Medicare & Medicaid Services cost report data to compare converting hospitals to eligible nonconverting hospitals. We also conduct a content analysis of 33 news articles and phone interviews with local rural residents to assess how REH conversions are presented in the media and perceived in communities. FINDINGS: Hospitals that converted to REH status had low inpatient volumes, occupancy rates, and revenues, suggesting they were positioned to benefit financially from eliminating inpatient services. Content analysis revealed that news articles were primarily neutral in tone (54.5%), with most (90%) describing the financial benefits of conversion. Interviews with rural residents highlighted negative perceptions of local health care and revealed that many preferred not to use their local REH even when available. CONCLUSIONS: REH designation may provide financial lifelines to rural hospitals with declining inpatient demand, but community skepticism and limited willingness to use REHs may constrain their role in sustaining health care access. The long-term effectiveness of this policy may depend on addressing both financial viability and community trust in rural health care delivery.