Understanding Rural-Urban Differences In Nonprofit Hospital Financial Assistance Generosity

Background/Purpose

Medical debt is a pervasive and harmful reality for millions of Americans that leads to forgoing needed medical care and the inability to afford basic needs. The burden of medical debt is not distributed evenly as Black Americans, low-income Americans, people living in the southern United States and rural Americans report significantly higher rates of medical debt. One mechanism to lessen the medical debt burden is nonprofit hospital financial assistance in which nonprofit hospitals cancel the amount owed by patients completely or provide a discount. Nonprofit hospitals have significant discretion in determining who is eligible for financial assistance and little is known about which hospitals are more or less generous. Even less is known about differences between rural and urban nonprofit hospitals’ financial assistance eligibility policies. The objective of this study was to examine nonprofit hospital financial assistance eligibility thresholds in relation to rurality and other nonprofit hospital characteristics.

Methods

We conducted bivariate and multivariable regression analyses for two outcome variables: financial assistance eligibility for free care as a percentage of the Federal Poverty Level and financial assistance eligibility for discounted care as a percentage of the Federal Poverty Level. We adjusted for organizational level covariates including geographic location (rural/urban), health system affiliation, disproportionate share hospital status, academic affiliation, Catholic hospital affiliation, number of hospital beds, and total hospital income. We merged financial assistance eligibility data from the Lown Hospital Index (collected 2024-2025) and 2023 American Hospital Association Annual Survey Data (N=2,462).

Principal Findings

Rural nonprofit hospitals reported significantly lower mean percentage of the Federal Poverty Level to determine financial assistance eligibility in bivariate analyses for free care (192.57% vs. 229.20%, p < .001) and discounted care (336.82% vs. 395.32%, p <.001) as compared to urban nonprofit hospitals. After adjusting for additional hospital characteristics, these associations remained significant with urban nonprofit hospitals reporting significantly higher eligibility for free care (β = 22.37, p < .001) and discounted care (β = 33.14, p < .001).

Conclusion

This study demonstrates that rural hospital location is associated with reporting a lower percentage of the Federal Poverty Level to determine eligibility for financial assistance. Practically, this means that patients with higher incomes are less likely to be eligible for financial assistance in rural nonprofit hospitals as compared to urban nonprofit hospitals. While our study cannot determine causality, our findings lead to questions of whether less generous financial assistance policies in rural areas contribute to the higher rural medical debt burden. Moreover, our study contributes to the literature demonstrating rural residents experience greater barriers to accessing health care as compared to urban residents. Our findings demonstrate that policy revision should focus on standardizing financial assistance eligibility thresholds to ensure equitable access regardless of geographic location. This study sheds lights on one potential mechanism to promote equitable access to health care and lessen medical debt, thereby allowing all communities to thrive.