More than 180 rural hospitals in the United States have closed since 2005, according to the Chartis Center for Rural Health, while providers spend over $25 billion annually on claims adjudication, with nearly $18 billion of that tied to claims that are ultimately paid, according to Premier Inc.
That’s not a demand problem. It’s an administrative one. And increasingly, it’s a technology infrastructure problem tied to how work is managed, measured, and automated.
And for rural hospitals operating with limited staff and thin margins, that level of inefficiency isn’t just costly; it’s unsustainable.
The Work Behind Getting Paid
In most healthcare organizations, a claim isn’t processed once and paid; it’s worked over and over again.
It gets handed off, corrected, resubmitted, and appealed. Each of those touch points requires human time, and each one introduces delay and cost. According to the Council for Affordable Quality Healthcare (CAQH), administrative transactions in healthcare still cost the system tens of billions annually, with a sizable portion being driven by manual processes.
Even more concerning, a large share of denied claims that ultimately get paid requires intervention, meaning that much of the work happening inside financial operations is rework, not value creation, as highlighted in the Premier analysis.
That’s where a lot of margins disappear.
Why Rural Hospitals Feel It First and Hardest
Large health systems can absorb inefficiency. Rural hospitals can’t.
Nearly half of rural hospitals are operating at a financial loss, and many are at risk of closure due to sustained margin pressure, according to the Chartis Center report.
When you have smaller teams, fewer specialists, and less redundancy, every extra touch matters. Administrative staff aren’t just processing claims; they’re juggling eligibility issues, documentation gaps, payer requirements, and follow-up.
There’s no buffer.
In larger systems, inefficiency is expensive. In rural hospitals, it’s existential.
Complexity Is Growing Faster Than Capacity
Payers are continuing to increase requirements, which means more edits, more prior authorizations, and more documentation specificity. A 2024 American Medical Association survey found that physicians complete an average of 43 prior authorizations per week with many reporting delays that directly impact care delivery.
At the same time, systems remain fragmented, and workflows are rarely aligned across the financial lifecycle. The result is simply more work per claim. Not more reimbursement. Not better outcomes. Just more effort required to get paid.
Where AI Fits and Where It Doesn’t
There’s a lot of discussion right now about AI solving administrative burden in healthcare. But in practice, AI is not a replacement for the people doing this work, especially in rural hospitals.
The reality is that a substantial percentage of the issues that require human intervention are tied to nuance. Documentation context, payer-specific rules, and incomplete information aren’t problems you can fully automate.
Beyond automating repetitive tasks, AI is increasingly being used to improve visibility—helping organizations analyze claims data, identify patterns, and enhance payment accuracy across workflows, as outlined by McKinsey & Company
But resolution still requires human judgment.
In rural hospitals, the goal isn’t to replace people. That’s not realistic, and it’s not the right objective. The goal is to reduce the amount of unnecessary work those people are being asked to do so they can focus on more high-value work.
AI works best as a force multiplier, helping teams focus on what actually requires expertise instead of chasing preventable problems.
The Real Opportunity: Reducing the Work, Not Just Automating It
Too often, the focus is on how to process work faster. The better question is, why does the work exist in the first place?
If a claim is touched multiple times before it’s paid, speeding up those touches doesn’t solve the problem. It just accelerates inefficiency.
The opportunity is to reduce the number of touches altogether.
That starts with understanding where work is being created, where breakdowns are happening, where rework is being introduced, and where effort is being duplicated. From there, organizations can begin to redesign workflows to prevent issues instead of reacting to them.
That’s where both operational discipline and technology need to come together.
What’s at Stake
Rural hospitals aren’t just healthcare providers; they’re access points for entire communities.
When they close, patients don’t just lose convenience, they lose access. The Chartis Center for Rural Health continues to warn that rural hospital closures create care deserts, forcing patients to travel significantly farther for essential services.
We’re investing heavily in clinical innovation and AI across healthcare. But if the administrative side of the system continues to erode financial stability, those investments won’t matter for the organizations that can’t afford to stay open.
Administrative complexity is not a secondary issue. It’s a structural one. Until we address it by reducing unnecessary work, improving visibility, and supporting the people doing the work, rural hospitals will continue to operate at a disadvantage they can’t overcome.
About Matt Seefeld
Matt Seefeld, CEO of MedEvolve, is a healthcare executive with more than 25 years of experience in the assessment, design, and implementation of process improvement programs and technology development for the healthcare revenue cycle. He focuses on reducing administrative complexity and improving operational performance across healthcare organizations.
