Rural healthcare is collapsing faster than many realize. A new KFF report found that 44% of rural hospitals have negative operating margins, and that since 2017, 62 rural hospitals closed compared to 10 that opened, a net reduction of 52 hospitals. At the same time, retail pharmacy closures are accelerating, with Rite Aid, Walgreens and CVS shutting hundreds of stores across small towns and rural America. Walgreens alone has announced plans to close up to 25% of its locations.
The downstream consequences aren’t just about inconvenience. They’re about life and death, economic resilience and national security. Rural Americans are losing access not only to emergency care, but also to the basic healthcare infrastructure that underpins entire communities.
The current healthcare delivery model–centralized, hospital-centric and deeply inefficient–is unsustainable, particularly in rural America. We need a tiered, rational and tech-enabled model of care that recognizes the strategic role of local pharmacies and community providers. Failure to act is both a public health risk and a systemic vulnerability.
In many cases, Americans now live more than 30–50 miles from the nearest emergency room or pharmacy. Entire regions have become care deserts.
This isn’t just a health equity issue. Imagine large swaths of the country without access to clean water, electricity or internet. We’d call that a national crisis. Healthcare access deserves the same urgency.
Meanwhile, we’ve over-invested in duplicating high-cost services in urban centers while leaving rural communities behind. In many cities, multiple hospital systems compete for the same patients, not because of need, but because of perverse financial incentives tied to volume and reimbursement distortions like the 340B program.
These urban systems survive by maximizing utilization. But as I outline in my book Bringing Value to Healthcare, in rural areas, where patient volumes are lower, that same model collapses under its own weight. Keeping a surgical center open to perform one hip replacement every few months is both inefficient and dangerous for patients. Competency requires volume.
Retail giants like Walgreens, CVS and Walmart tried to disrupt healthcare delivery but misunderstood the business. Walgreens and CVS approached care delivery like a transactional retail business, when it is fundamentally relational. Healthcare isn’t greeting cards and milk. Patients need continuity, counseling and trust.
Retailers failed to culturally adapt. But that doesn’t mean local pharmacies can’t play a central role in care access, if they get the model right.
In many rural towns, independent pharmacies are the last standing healthcare resource. They know their patients. They’re part of the community. When empowered, these pharmacies already deliver flu shots, blood pressure checks and even chronic disease counseling. With the right investment in telemedicine, diagnostics and flexibility in what services pharmacists are allowed to provide, they could serve as frontline care hubs.
What we need is a tiered, hub-and-spoke delivery system, predicated on three principles.
First, sophisticated procedures are handled in high-volume centers of excellence (the ‘hubs’), ensuring that complex care is performed by highly competent, well-practiced teams.
Second, stabilization, preventive care, chronic disease management and minor emergencies happen in local settings (the ‘spokes’), supported by pharmacies, clinics and telemedicine-equipped providers.
Third, technology–from telemedicine to remote diagnostics to even robotic surgery–bridges the distance between local providers and specialty centers, preserving quality while expanding access.
Local pharmacies and community providers would be fully integrated into this model, not as an afterthought, but as essential pillars. Rather than forcing rural communities to prop up expensive and unsustainable hospitals, we should invest strategically in primary care access, stabilization services and virtual consult capabilities.
This approach doesn’t just save money; it builds resilience. It allows rural communities to maintain basic healthcare infrastructure during economic downturns, natural disasters or future pandemics. Ultimately, a smarter delivery model strengthens our national fabric economically, socially and strategically.
Decision-makers in Congress and on Wall Street need to stop treating rural healthcare like an afterthought. Strategic investment in local care infrastructure, supported by technology and a rational scope of services, is essential.
The private sector must rethink where it deploys capital and stop chasing high-margin procedures at the expense of basic access. And the public must demand better. Rural Americans are not second-class citizens.
The rural healthcare crisis is real but solvable. The expertise and the technology needed to put rural health on a surer footing already exist. What’s missing is the will, and a clear vision for a smarter, more sustainable model of care.
