Is Bigger Better? Exploring How System Membership Impacts Rural Hospitals

By Glenn Melnick, Katya Fonkych

In 2016, 59 rural hospitals in 36 California counties provided a wide range of critical services to more than two million patients. These patients were, on average, sicker, older, and more vulnerable than their urban counterparts. The hospitals where they were treated are vital lifelines in the communities they serve.

Despite the crucial role they play in the lives of millions of Californians, many of the state’s rural hospitals struggle to maintain financial health. Nearly a quarter of them have closed over the past 20 years, with consistent financial losses being one of the main indicators of an impending closure. To try and shore themselves up against these risks, many hospitals have chosen to join a multi-hospital system that offers groups of medical practices the opportunity to share and hopefully alleviate the financial and operational risks that haunt their industry.

Is Bigger Better? Exploring the Impact of System Membership on Rural Hospitals examines the impact that multi-hospital systems have had on their members, and explores policy options the state could consider in response to their growth.

Key findings include:

  • The percentage of California rural hospitals in multi-hospital systems increased from 18% in 1995 to 47% in 2016.
  • Joining a system is one of several possible routes to financial stability, and presents a mixed set of results.
  • Policymakers should carefully consider the outsize impact Medi-Cal has on rural hospitals when legislating on health care.

The full report is available for download below.