title: Predicting Financial Distress and Closure in Rural Hospitals.
abstract: Annual rates of rural hospital closure have been increasing since 2010, and hospitals that close have poor financial performance relative to those that remain open. This study develops and validates a latent index of financial distress to forecast the probability of financial distress and closure within 2 years for rural hospitals.
  
  
  
  Hospital and community characteristics are used to predict the risk of financial distress 2 years in the future. Financial and community data were drawn for 2,466 rural hospitals from 2000 through 2013. We tested and validated a model predicting a latent index of financial distress (FDI), measured by unprofitability, equity decline, insolvency, and closure. Using the predicted FDI score, hospitals are assigned to high, medium-high, medium-low, and low risk of financial distress for use by practitioners.
  
  
  
  The FDI forecasts 8.01% of rural hospitals to be at high risk of financial distress in 2015, 16.3% as mid-high, 46.8% as mid-low, and 28.9% as low risk. The rate of closure for hospitals in the high-risk category is 4 times the rate in the mid-high category and 28 times that in the mid-low category. The ability of the FDI to discriminate hospitals experiencing financial distress is supported by a c-statistic of .74 in a validation sample.
  
  
  
  This methodology offers improved specificity and predictive power relative to existing measures of financial distress applied to rural hospitals. This risk assessment tool may inform programs at the federal, state, and local levels that provide funding or support to rural hospitals.
authors: North Carolina Rural Health Research and Policy Analysis Center, Cecil G. Sheps Center for Health Services Research, University of North Carolina at Chapel Hill, Chapel Hill, North Carolina.|Department of Health Policy and Management, University of North Carolina at Chapel Hill, Chapel Hill, North Carolina.
authors: George M
authors: GM
authors: Holmes
authors: North Carolina Rural Health Research and Policy Analysis Center, Cecil G. Sheps Center for Health Services Research, University of North Carolina at Chapel Hill, Chapel Hill, North Carolina.|Department of Health Policy and Management, University of North Carolina at Chapel Hill, Chapel Hill, North Carolina.
authors: Brystana G
authors: BG
authors: Kaufman
authors: North Carolina Rural Health Research and Policy Analysis Center, Cecil G. Sheps Center for Health Services Research, University of North Carolina at Chapel Hill, Chapel Hill, North Carolina.|Department of Health Policy and Management, University of North Carolina at Chapel Hill, Chapel Hill, North Carolina.
authors: George H
authors: GH
authors: Pink
mesh_terms: D016361:Bankruptcy / Q000706:statistics & numerical data / Q000639:trends*; D005544:Forecasting; D006271:Health Facility Closure / Q000191:economics*; D006780:Hospitals, Rural / Q000191:economics*; D006801:Humans; D011379:Prognosis; D014481:United States
keywords: bankruptcy, critical access hospitals, financial distress; hospital closure, rural health