(The Center Square) – Sixteen rural hospitals in California are at risk of closure, with five at risk of closing immediately. That's according to a report from the Center for Healthcare Quality and Payment Reform.
The report says California has had two rural hospitals close since 2015. The state still has 59 open rural inpatient hospitals, and 22 hospitals have cut or lost services. Many other states are faring worse than California, the report continues. Texas has 84 hospitals at risk of closing, with 26 being at risk of immediate closure. Kansas has 84 hospitals at risk of closure, and 28 are at risk of immediately closing.
Notably, Utah, Maryland, Delaware and New Jersey have no hospitals at risk of closure, according to the report.
Harold Miller, CEO of Center for Healthcare Quality and Payment Reform, said rural hospitals all over the country are struggling because private health insurance plans pay hospitals less than what's needed to cover the costs of care.
Miller declined to answer The Center Square's questions about which California hospitals were at risk of closure. But he noted, “It is a problem in California, with low payments in a lot of cases."
“But many people think the only problem is Medicaid, and it turns out that in many places, including in California, low payments from commercial insurance plans also cause the problem," Miller told The Center Square Thursday.
The problem is especially prevalent at small, rural hospitals, Miller said.
“It costs more to deliver healthcare services in small, rural communities,” Miller said. “Part of that stems from the fact that there is a certain fixed cost associated with delivering essential healthcare services in any community.”
If a small, rural hospital has an emergency room, Miller said, a physician and a nurse have to be there around the clock to take care of a small number of patients.
That drives up the cost of delivering emergency care per patient, he said.
“There’s a lot of insurance plans that don’t adjust for that,” Miller said. “They simply say, ‘This is the amount we pay for an emergency room visit or an X-ray,’ without recognizing the fact that that payment that might be adequate in an urban area or a large hospital isn’t going to cover the fixed cost associated with that service in a rural community.”
According to the California Hospital Association, almost 2 million people live in the Golden State’s rural communities. Approximately 37 critical access hospitals – or hospitals that provide care to communities at least 35 miles away from another medical facility – saw their operating margins drop 8% between 2019 to 2023.
Democratic lawmakers in California have drawn attention in recent months to challenges that the state’s healthcare system faces as a result of federal budget cuts, according to previous reporting by The Center Square. Roughly $30 billion a year was expected to be cut from Medi-Cal, the Golden State’s version of Medicaid.
“First and foremost, I would say that H.R. 1 has done a huge disservice and was incredibly detrimental to our hospital system overall,” said Assemblymember Dawn Addis, D-San Luis Obispo and chair of the Assembly Budget Subcommittee on Health. H.R. 1 is the One Big Beautiful Bill Act, which President Donald Trump signed on July 4, 2025.
“We’ve put money into the direct stressed hospital loan program, as well as the distressed hospital grant program," Addis told The Center Square on Thursday.
As lawmakers work to prevent more emergency closures like that of Glenn Medical Center in the Northern California community of Willows, Addis said federal action has undermined efforts to bolster the healthcare system in California.
“It’s been made very, very difficult by the Trump administration’s move through H.R. 1 to create the largest rollback of healthcare coverage in modern memory,” Addis said.
Legislators on the other side of the aisle told The Center Square that while they agreed that funding was lacking for taxpayer-funded health insurance like Medi-Cal, there are other reasons for why so many rural hospitals are struggling.
“We have serious problems for several reasons, particularly in rural areas where a disproportionate amount of their business is Medi-Cal,” Sen. Roger Niello, R-Fair Oaks, told The Center Square on Thursday morning. “We woefully under-reimburse for Medi-Cal, and it’s a horrible burden on the medical community. We offer a large array of benefits, and we force providers to pay for a significant amount, so a lot of these hospitals are in trouble exactly because of that.”
Not enough resources are provided to hospitals to help them out, Niello said. He also added that lawmakers in California have voted to give more taxpayer funds to Planned Parenthood, in particular, than to hospitals.
“We gave a huge grant to Planned Parenthood, and that grant is totally not transparent,” Niello said. “We don’t know where the money is going. Yet, for hospitals, it’s a loan, and they have to account for the money. It’s an inconsistent application of assistance.”
The Center Square reached out to Democratic lawmakers on Thursday for this story but did not hear back before publication time.
