As rural hospitals close ORs, surgical care deserts are expanding too

By Francesca Mathewes / July 15, 2026

Roughly a third of the nation’s rural hospitals — 720 in all — are at risk of closing, according to a report from the Center for Healthcare Quality and Payment Reform. The findings begs a familiar question among ASC leaders: When hospitals retreat from a service line, who ends up with the volume?

CHQPR’s analysis, based on cost reports hospitals submitted to CMS through 2025, attributes the risk to three compounding problems: losses on patient services, insufficient revenue from other sources to offset those losses and low financial reserves. More than 40% of rural hospitals lose money delivering care, the report found, and the federal pandemic assistance many once relied on to cover the gap has ended. Almost a third of rural hospitals lost money overall in 2024-25.

The strain is already reaching the specialties ASCs compete in directly. Ogdensburg, N.Y.-based North Star Health Alliance shared plans June 24 to close its North Country Orthopaedic Ambulatory Surgery Center and North Country Orthopaedic Group, both in rural Watertown, N.Y., within 90 days. The system, which sought bankruptcy protection in February, is folding the closures into a broader restructuring that has already cut more than 100 positions.

“We recognize that this transition will be difficult for patients, providers, employees and the broader community,” North Star Health Alliance interim CEO Andy Manzer said in a news release announcing the closures. “Our priority is to support those affected, preserve continuity of care wherever possible, and maintain local access to orthopedic services as we continue working to stabilize the health system and build a more sustainable model of care for the North Country.”

North Star is not an outlier. In the past several weeks, Baltimore-based LifeBridge Health said it would shutter its Ellicott City, Md., ASC over low procedure volumes, and Fairfield Medical Center in Lancaster, Ohio, moved to close its River View Surgery Center ahead of a planned acquisition by Columbus-based OhioHealth. Unlike the maternity and behavioral health closures that have dominated recent hospital cutback lists, these are surgical service lines — the exact caseload ASCs are built to take on.

Even so, ASC leaders describe this year’s growth case as resting less on hospital retreat and more on regulatory tailwinds pointed at the same specialties. CMS’s three-year phaseout of the Medicare inpatient-only list removes 285 procedures, most of them musculoskeletal, with 266 of those coming off in 2026 alone, on top of 573 new codes added to the ASC Covered Procedures List.

“The expansion of approved procedures is huge — especially cardiac and orthopedic cases,” Tina DiMarino, CEO of Custom Surgical Partners, an ASC company that has developed more than 150 centers, told Becker’s in late 2025. “New CMS codes coming into the ASC space allow both existing and new centers to grow by pulling cases out of inpatient and HOPD settings.”

That opportunity runs into a geography problem, though — and it is most acute in the same rural markets CHQPR flagged. Ninety-four percent of ASCs were located in urban areas in 2024, compared with 6% in rural areas, according to a report from the Medicare Payment Advisory Commission. The number of ASCs per 100,000 Medicare beneficiaries also varies sharply by state, with the sparsest rural states among the least served.

State law is part of what keeps rural ASCs rare. Certificate-of-need laws, which require state approval before a new facility can open, remain in effect in some of the most rural states, including Wyoming and Idaho. Montana repealed its CON law in 2021 and has since seen a 12.5% increase in the number of ASCs, home health agencies and inpatient addiction treatment centers, according to an October report from the Frontier Institute.

Linda Bedwell, CEO of Gillette, Wyo.-based ASCend, said that gap — not a shortage of hospital-shed volume — is the real constraint on rural ASC growth. Her company is a management services organization built to keep rural surgery centers independent and physician-led.

“Unfortunately, many hospital systems are cutting services, leading to healthcare deserts,” Ms. Bedwell said. “ASCs are uniquely positioned to be a solution — providing affordable, sustainable healthcare. That includes everything from Medicare solvency to the financial burden patients feel. ASCs are essential to achieving a value-based care future.”