Rural hospitals in New Mexico and across the country are experiencing financial hardship and it started before recent changes in federal funding.
The "One Big Beautiful Bill Act" of 2025 drastically cuts funds for both Medicaid and Medicare over the next decade but as far back as 2016, hundreds of hospitals located near urban centers began securing what is called “administratively rural” status for Medicare purposes.
Burton Eller, legislative director and executive director of the advocacy group National Grange, noted the dual-hospital classification unlocked reimbursement rates designed to support care in genuinely rural communities where nearly a quarter of residents struggle to pay hospital bills.
"These large urban hospitals and teaching hospitals, they don't need it," Eller contended. "They've got paying customers that they can get their operating margin from."
New Mexico is scheduled to receive $211 million in federal money to support rural health care this year. Nonetheless, in 2025, state legislators were informed six to eight rural New Mexico hospitals could close over the coming years.
In 2017, the dual classification loophole was used by just three hospitals located in urban areas but rose to 425 in 2023, with prevalence varying by state. More than three quarters of such hospitals were nonprofit, including many large academic medical centers in metropolitan areas. Eller argued Congress should ensure federal programs supporting rural health are directed solely to geographically rural hospitals.
"We've got to figure out a better way to define what is a safety net hospital," Eller emphasized. "We've got to make sure that it's truly rural and underserved. I think we've got to have a definition that we can't run a Mack truck through."
Much like when high schools close in rural towns, hospital closures can act as a catalyst for economic and social decay. A 2025 study at the University of Iowa found negative economic impacts to businesses and a general decline in access to health care in the 150 communities where rural hospitals have closed over the past 15 years.
New Mexico, with 43 hospitals as of 2022, is not among states with a high number of hospital closures. Overall, it would be Texas, with 25 closures, followed by Tennessee, which has 15.