The Rural Revenue Squeeze: Why Self-Pay Rates Are Rising and What Small Hospitals Can Do About It
I spend a lot of time with leaders at smaller and rural hospitals. In the past few months alone, I've visited hospitals in Georgia, Kentucky, Texas, and Arkansas—and whether I’m sitting down with a CEO, a business office director, or a patient financial services manager, the message has been strikingly consistent: "Margins are being squeezed, and self-pay is rising."
And they’re right. There’s a shift happening across the country, particularly in communities that already operate on tight financial footing. The combination of Medicaid disenrollments, growing out-of-pocket responsibilities, and economic pressure has created a new revenue challenge for rural hospitals that simply can’t be ignored.
In March, I had the opportunity to speak on this very topic with members of HFMA’s Georgia chapter. We were invited to present because our team at PatientPay has been at the center of this issue for more than 15 years—working with thousands of providers across the country to modernize the way they collect from patients. And when it comes to rural healthcare, there’s no doubt: the rise in self-pay is one of the most urgent financial issues these hospitals are facing.
What’s Driving the Rise in Self-Pay?
1. Medicaid Disenrollments and Uninsured Rates
The end of Medicaid continuous enrollment protections has led to millions losing coverage, with many disenrolled for procedural reasons despite remaining eligible. This has disproportionately affected rural areas, where Medicaid covers a higher percentage of residents—20% of adults and 40% of children—compared to urban areas. (Georgetown University Health Policy Institute, NRHA)
2. Uncompensated Care
Rural hospitals face significantly higher levels of uncompensated care than urban facilities. In 2019, rural hospitals in Medicaid non-expansion states had uncompensated care rates as high as 6.31%, compared to 2.55% in expansion states. This burden has worsened due to Medicaid disenrollments and the expiration of pandemic-era financial relief. (NCBI)
3. Self-Pay Trends
With the growth of high-deductible health plans and rising uninsured rates, self-pay patients now make up a larger portion of rural hospital revenue. Unfortunately, many struggle to meet financial obligations, resulting in increased bad debt and financial strain. (Fierce Healthcare)
4. Financial Impact on Rural Hospitals
Over 700 rural hospitals reported financial losses in 2023–2024, with nearly 400 experiencing losses greater than 5%. These facilities—many operating on razor-thin or negative margins—may face difficult decisions relative to staffing and services so they can continue to serve their communities. (AJMC)
Why Waiting on Policy Won’t Solve the Problem
Yes, long-term policy changes are important. But hospitals can’t wait on legislation to stabilize their bottom line. As noted in the research:
"Rural hospitals must leverage both policy and technology to thrive."
That’s true—but when I’m sitting with a rural CEO, they don’t have the luxury of waiting for policy. What they do have is the ability to take action today. Technology that helps hospitals collect more, faster, with fewer resources isn’t a luxury—it’s now a necessity.
A Practical Path Forward: Modernizing the Patient Payment Experience
When self-pay goes up, so does the pressure on your billing office. Traditional collection strategies—relying on paper statements, long lag times, or generic one-size-fits-all payment portals—don’t meet the moment.
PatientPay offers a proven, modern alternative built specifically for healthcare. Here’s what we’ve seen work:
Engaging patients earlier with digital-first billing (text and email), not weeks after the visit.
Offering payment options like self-directed plans instead of an all-or-nothing approach.
Providing a frictionless experience—patients can pay their bill instantly without needing to download an app or log into a portal.
Using behavioral science to determine the best time, format, and message to drive patient action.
Our platform’s proprietary dunning engine uses 15 years of insight and behavioral data to personalize the billing journey—resulting in a 25–100% increase in patient collections, often within days of go-live. In fact, we consistently see payments come in within two minutes of launch.
As Randall Shafer from Firstsource said:
"Engaging patients early with digital tools is vital to manage rising self-pay balances."
We couldn’t agree more.
Final Thoughts
Self-pay isn’t a trend. It’s the new reality—especially in rural healthcare. And the hospitals that will thrive in this next chapter are the ones who recognize that modern billing isn’t a back-office function—it’s a strategic priority.
If you are a leader fighting through these challenges from rising self pay, shrinking margins, or both—let’s talk. We’ve been solving this problem for over 15 years, and we’d be glad to show you what we’ve learned.
Schedule a demo or reach out to start the conversation.
