Rural Emergency Hospital (REH)

The Rural Emergency Hospital designation, established in 2023, is the newest federal category for rural healthcare facilities. It was created in response to widespread closures of rural hospitals, offering a way for them to remain open without the high costs of providing inpatient services. REHs focus entirely on emergency, outpatient, and diagnostic care, ensuring communities retain essential medical access.

Key Characteristics

  • No inpatient beds (may keep observation beds up to 24 hours)

  • Must operate a 24/7 emergency department

  • Eligible for monthly federal facility payment (~$272,000 in 2025)

  • Medicare reimburses outpatient services at 105% of PPS rates

  • Must meet staffing and transfer requirements for higher-level care

Benefits

  • Provides a financial lifeline for hospitals that cannot sustain inpatient services

  • Preserves emergency and outpatient access for rural communities

  • More predictable revenue through federal payments

  • Flexible to adapt to modern healthcare needs (e.g., telehealth, urgent care, outpatient surgeries)

Limitations

  • Loss of inpatient services can be controversial locally

  • Requires strong referral agreements with nearby hospitals

  • Patients needing overnight or specialty care must be transferred

  • Long-term community acceptance can vary depending on expectations

Impact on Communities

For many towns, REH designation can mean the difference between having some form of local healthcare access or none at all. By preserving emergency departments and outpatient clinics, REHs maintain a community’s healthcare safety net while preventing complete closure.

Historical Context

  • Designation created by Congress in 2020, effective January 2023.

  • Response to a decade of rural hospital closures (over 140 closed since 2010).

  • Designed as a middle ground: not a full-service hospital, but not a closure either.

  • Provides predictable revenue through monthly federal payments.

Quick Facts

  • Inpatient Services: None (only outpatient and 24-hour observation)

  • Emergency Department: Required 24/7

  • Federal Facility Payment: $272,000 per month ($3.2M annually in 2025)

  • Outpatient Reimbursement: 105% of PPS rate (Medicare)

  • Transfers: Must have agreements with higher-level hospitals for inpatient care

Community Impact

  • Preserves emergency and outpatient access in communities that would otherwise lose all local care.

  • Provides stability for staff and patients during times of financial strain.

  • Reduces burden on nearby EMS systems by keeping ER access local.

  • Often controversial — some communities mourn the loss of inpatient beds, while others welcome the financial stability.

FAQs

Why would a hospital choose REH status?

If inpatient volume is unsustainable, REH status allows the facility to stay open while focusing on outpatient and emergency services.

Can REHs keep patients overnight?

Only for up to 24 hours under observation. Longer stays require transfer.

What happens to staff when a hospital converts to REH?

Staffing models typically shift — fewer inpatient nurses, more emphasis on ER, outpatient, and diagnostics.

Is REH permanent?

Yes, it’s a federal designation. A hospital that switches cannot return to CAH status, but could potentially transition to PPS if services expand significantly.