Using innovation to offset financial deficits and remain profitable
ndeniably, healthcare is an important subject to everyone. In many rural states, however, small hospitals may lack an abundance of resources and are facing funding cuts.
“Rural hospitals are the backbone of health care in many Mississippi communities, providing critical access to emergency services, maternity care, and chronic disease management,” said Richard Roberson, President/CEO of the Mississippi Hospital Association. “The single greatest challenge is financial sustainability, driven by low reimbursement rates, a highly uninsured and underinsured population, and rising staffing and supply costs. These pressures are compounded by workforce shortages and the need to invest in modern technology.”
According to the Association, Mississippi has roughly 80 rural hospitals, including about 30 critical access hospitals (CAHs), as well as additional small rural PPS hospitals and rural emergency hospitals (REHs), depending on the data source and year. The Prospective Payment System (PPS) is a reimbursement method in which Medicare pays a fixed, predetermined amount for a service or stay, rather than reimbursing the hospital’s actual costs. In contrast, CAHs are reimbursed on a cost basis.
“While they face undeniable challenges, we are committed to working with our partners in the state and federal government to ensure these vital institutions remain viable and continue serving their patients with excellence,” said Roberson.
Chad Netterville, Executive Director of the Mississippi Rural Hospital Alliance, explains the criterial that defines a rural hospital. “A hospital is considered rural based on federal and state definitions that include geographic location, population density, and proximity to urban centers.”
He said the two most common criteria are: First, CAH designation by CMS (Serving rural areas, limited to 25 inpatient beds, average length of stay less than 96 hours, and located more than 35 miles from another hospital).
Second, rural classification by the Office of Management and Budget (OMB) or the Rural Health Research Center is based on county or ZIP code rurality metrics.
“The Mississippi Rural Hospital Alliance works closely with rural hospitals by advocating for rural-specific payment reforms and regulatory relief at both the state and federal levels, providing education and support, and facilitating peer networks to share best practices,” said Netterville.
“Rural hospitals are largely stable right now and continue to innovate with telehealth and partnerships” said Roberson. “All hospitals face financial pressures due to low patient volumes, high uncompensated care, and workforce shortages.
“Overall, sustainability is an ongoing concern, with performance varying based on local demographics, payer mix, community resources, and the impact of the One Big Beautiful Bill Act (OBBBA), which will begin to cut the supplemental payment rate hospitals currently receive under the Mississippi Hospital Access Program (MHAP),” he said.
Netterville said several rural hospitals have entered into partnerships, management agreements, or acquisitions with larger health systems. “For some facilities, strategic affiliation provides access to capital, clinical support, supply chain efficiencies, and shared technology, all of which can be essential for survival. However, acquisitions are not the only model. Collaborations and networked service agreements can also support independence, while strengthening operations.”
Additionally, recruitment and retention of nurses, physicians, allied health professionals, and support staff are significant problems in rural Mississippi. Limited local labor pools, competition with bigger cities, and burnout exacerbate shortages, he said.
Asked whether state or federal legislation has affected these hospitals, Roberson replied, “Yes, both positively and negatively. The Rural Hospital Transformation Program (RHTP) gives $10 billion per year to states for fiscal year 2026-2030. Mississippi applied for and received an RHTP award of almost $206 million for fiscal year 2026, the first tranche of funding.
“The program was created, however, because of the deep cuts to health care in OBBBA. As previously referenced, that law also steps down the commercial rate benchmark used in Mississippi’s Hospital Access Program (MHAP) starting October 1, 2028. Estimates suggest up to $160 million per year could be lost in Mississippi hospital funding once fully phased in. The OBBBA cuts are in addition to long-planned disproportionate share hospital (DSH) cuts that began in October of 2025. Unfortunately, the RHTP funds for Mississippi are not guaranteed to go directly to Mississippi hospitals.”
Looking ahead, Netterville predicted, “In the near term, we expect continued expansion into telehealth, more networks, innovation in staffing, and policy reforms aimed at leveling the playing field for rural providers.”
Roberson said, “Rural hospitals are more than health care facilities. They are economic anchors, major local employers, and community partners that influence overall health, education, and quality of life in many Mississippi communities. Sustaining rural hospitals requires thoughtful policy, community engagement, and strategic innovation. Mississippi’s rural providers are resilient, but they need continued support to thrive in an increasingly complex health system.”