What rural healthcare leaders need now

Last May, when H.R.1 was first introduced in the House, the bill that would come to be known as the One Big Beautiful Bill Act (OBBBA) was already causing consternation among healthcare leaders across the country — particularly in smaller and rural communities. Here at MEDITECH, we assembled a task force to discuss the potential impacts to our rural and community hospitals and healthcare systems, and we began developing tools and resources to help them navigate the challenging road ahead.

In our 50-plus year history as a company, we’ve had customers of every size, footprint, and geographic location. Our EHR is used by critical access hospitals in small rural communities in every state. It’s the same EHR that powers the country’s largest integrated delivery network, with 190 hospitals and 2,400 additional sites of care. We also have customers in nearly 30 other countries and territories spanning time zones around the globe.

But rural hospitals and the communities they serve remain core to our mission and values. The vast majority of time spent on the road by our staff involves visiting smaller cities and towns to implement and support our software. We eat in the diners and family-owned restaurants on their main streets. We interact with shop owners, residents, and hospital and clinic staff. And we attribute much of the success of our company to genuinely understanding and appreciating what makes these communities special and unique.

If we’re not careful, the OBBBA could deliver a fatal blow to rural and community healthcare as we know it. Maintaining profitability is already extremely challenging for rural and community healthcare providers, who face razor-thin margins. According to the Advisory Board, the median margin for rural healthcare organizations is less than 1% — 0.9% compared to 7.5% for urban systems. Moreover, a Chartis study revealed that 50% of rural hospitals in the U.S. are now operating at a financial loss. It will be even more challenging with the changes to reimbursement, Medicare and Medicaid enrollment requirements, and provider tax restrictions folded into the OBBBA.

Independence vs. Consolidation
What’s so wrong with allowing further consolidation in healthcare? Why should we keep independent rural and community hospitals afloat if they can’t survive the changing market conditions coming with the OBBBA? Why not allow them — even encourage them — to merge with bigger, better resourced organizations in larger communities? There are many reasons. 

In every industry, market leaders will tell you that unconstrained growth is what allows them to innovate, increase economies of scale, and provide better products and services at a lower cost to consumers. Sadly, precisely the opposite is often true. Reduced competition results in less innovation and lower quality products and services. Economies of scale may admittedly allow organizations to lower costs, but rarely are these cost savings passed on to consumers. In healthcare, that means that both insurers and patients pay more.

Higher Costs A 2025 study from the Health Affairs journal found that hospital mergers typically lead to a price increase of 20 to 30 percent for patients — reducing affordability and accessibility to necessary care. According to a 2024 study published in the Journal of the American College of Surgeons (JACS), mergers and acquisitions of U.S. hospitals and health systems rarely improve the quality of care delivered or result in lower health care costs and prices. Another 2024 study conducted by researchers at Harvard University, Yale University, and the University of Wisconsin-Madison found that mergers in rural regions and areas with lower incomes and higher rates of poverty generated larger average price increases.

Service Line Closures In addition to higher costs, hospital mergers between urban and rural healthcare organizations frequently result in a reduction in services and the closure of critical service lines in rural communities. Data from the Ohio University College of Health Sciences indicates that nearly 60% of rural hospitals that merged experienced a reduction in their services within five years post-merger. Maternal, neonatal, and surgical care services were the biggest targets for elimination after rural hospitals were acquired, according to a Health Affairs analysis. Healthcare leaders refer to small communities with reduced services as maternity and surgical deserts. This means patients in rural communities must travel long distances to receive care outside of their communities, a particularly problematic situation when labor & delivery (L&D) units close.

Lower Quality A 2020 study in the New England Journal of Medicine found that, in the three years after a hospital was acquired, there was no improvement in patient outcomes, including 30-day readmission and mortality rates. The authors also found that patient experience of care worsened after a merger, with patients reporting they were less likely to recommend the hospital, and physician and nurse communication was worse. A more recent study in the Journal of the American College of Surgeons showed decreased quality or no change following a hospital merger or acquisition, suggesting that merged hospitals may prioritize financial performance and administrative efficiency over patient care, leading to a decline in qualitative metrics such as patient satisfaction and care coordination.

Keeping Care Local
Over the past two months, I’ve met with dozens of rural healthcare leaders — CEOs, CFOs, CIOs, physician and nurse executives, and others. They’re particularly concerned about cuts to Medicaid, which serves a disproportionately larger share of their rural residents — and they’re bracing for reduced provider payments and coverage losses under Medicare, too. They expect new
work requirements and other provisions to result in more uncompensated care and greater financial strain, not to mention worsening health outcomes for their already vulnerable rural communities. They also know that the $50 billion that will be allocated over the next five years by the Rural Healthcare Transformation Program (RHTP) is a short-term fix, and many of them worry their organizations will receive a small portion of the funding, if any at all.

The loss experienced when rural and community hospitals and clinics surrender their autonomy is incalculable. I say that because there are impacts beyond cost, quality, and
availability of services that can’t be easily quantified. Rural healthcare organizations are a key pillar of their communities’ identities. There’s a sense of pride in smaller towns and rural areas in their own homegrown organizations. They don’t simply offer residents convenience, but trusted care by providers they know. In an era marked by polarization, tension between rural and urban communities, and an erosion of trust in science and medicine, patients are more likely to engage with local providers and leaders, and value their guidance. 

Just like we should be wary of additional consolidation among provider organizations, so too should we avoid continued consolidation among technology vendors. If we really want to increase innovation, we need more competition among EHR vendors, AI developers, and other members of the tech community — not less. 

What It Will Take
In order to foster the kind of innovation rural healthcare organizations need to thrive in the post-OBBBA environment — and not simply survive as diminished versions of their former selves — we’ll need to see several things:

• A fair distribution of resources
  This begins with a fair and transparent process for distributing RHTP funds. It means not favoring certain states, communities, or organizations based on political or cultural considerations. These decisions must also strike a fair balance between rural hospitals and urban safety net hospitals that see rural patients. Funding should be focused on need and the merits of specific projects.
• A genuine commitment to interoperability
  All constituents in the healthcare system — patients, providers, payers, administrators and beyond — benefit from the seamless and secure data sharing ecosystem established by TEFCA, but only if everyone participates (and plays by the rules). That means no more information blocking or other anticompetitive behavior, and enforcing the rules TEFCA has set for participants via the Common Agreement.
• A focus on solutions tailored to the rural health community
  EHR and other technology providers must value and respect the rural healthcare market enough to develop solutions that fit their unique care environments. That means offering them a full-fledged EHR, not a “lite” version — but still one that is easy for them to implement and use with limited resources. It also means not trying to shoehorn them into using a standard solution that doesn’t fit.
  
  

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Over my two decades at MEDITECH, I’ve witnessed the company not simply adapt to changing conditions and needs, but lead through them. When I began my career at the company, the Health Information Technology for Economic and Clinical Health (HITECH) Act was just making its way through Congress. Shortly after, the American Recovery and Reinvestment Act of 2009 (ARRA) provided an accelerant to the adoption and meaningful use of EHRs. The Continuity of Care Document (CCD) was adopted and MEDITECH led the charge, becoming the first vendor to successfully support it and one of just four vendors selected to participate in the ONC Test EHR Pilot Program.

We’ve continued to push to make interoperable healthcare data more accessible, meaningful, and usable. One of the guiding principles in the development of our Traverse Exchange data sharing network was to ensure that smaller independent community and rural healthcare providers had a level playing field, with access to the same data and resources as their peers at larger organizations. After all, the data belongs to the patient and should travel with them, without friction, wherever they receive care.

Much has changed over my career at MEDITECH but one thing has remained constant: Our commitment to rural and small community healthcare. We still produce solutions for the smallest rural and community hospitals and health systems. Solutions that are not scaled back versions of our EHR, but the same EHR that’s used in large, urban health systems — offered via pricing models that allow them to maintain their long-term sustainability without cannibalizing their
margins and impacting care.

What rural healthcare leaders need is choice. Choices in technology vendors. Choices that make sense for their communities. Choices that allow them to maintain their independence and control their own destiny. What they don’t need is more pressure to merge.

I hope state legislatures and rural health agencies appreciate the important role independent healthcare organizations play in their states’ smaller communities. Strengthening these organizations keeps care local, communities strong, and patients healthier. Pushing them to merge with larger, urban health systems — either through action or inaction — will result in diminished services, higher costs, less personalized care, and poorer health outcomes.

In the end, no matter how RHTP funds are allocated, rural healthcare organizations will face long-term challenges from changes made under the OBBBA. Regardless, MEDITECH has always stood by these vital members of the healthcare community — and we'll be with them for the long term.

Rachel Wilkes is a Fellow of the American College of Healthcare Data Management

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