The Rural Emergency Hospital (REH) designation is a new provider type created by the federal government to address the growing crisis in rural healthcare. REHs are hospitals that have converted from small rural or critical access facilities to focus solely on emergency, outpatient, and certain observation services. As of January 1, 2023, eligible hospitals can opt into this designation to remain financially viable while continuing to serve their communities.

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Unlike traditional hospitals, REHs do not provide inpatient services, but they are required to maintain 24/7 emergency care and may offer a wide range of outpatient services such as lab, radiology, behavioral health, and rehabilitation, depending on the needs of the local population.

 

The REH designation was introduced through the Consolidated Appropriations Act of 2021, in response to the growing number of rural hospital closures across the United States. Between 2010 and 2020, over 130 rural hospitals closed, with dozens more at high risk. These closures left communities without access to basic healthcare and emergency services.

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Recognizing that low patient volumes and high fixed costs were making full-service hospitals unsustainable in some rural areas, policymakers designed the REH model to create a financially stable path forward. By removing the requirement to operate inpatient beds—and by offering enhanced Medicare reimbursement—REHs are intended to help rural facilities stay open and focused on what their communities need most.

 

REH status offers rural hospitals a chance to remain operational—even thrive—by right-sizing their services to align with community demand. It supports healthcare access and emergency preparedness in areas that might otherwise lose all hospital-based care.

 

Key benefits include:

• Stabilizing rural healthcare access by preserving emergency and outpatient services.

• Enhanced Medicare payments, including a 5% increase for covered outpatient services and a monthly facility payment.

• Flexibility to expand services that meet local needs without the financial burden of inpatient care.

• Support for hospital sustainability in regions with declining population and utilization.

 

REH conversion is not a one-size-fits-all answer—but for many rural hospitals, it provides a vital lifeline. With the right planning, community input, and operational adjustments, transitioning to an REH can protect essential services, stabilize finances, and ensure long-term access to care.

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Our team has the expertise to guide hospitals through every step of this important transformation—so they can continue to be a cornerstone of rural health for generations to come.