Florida’s rural hospitals are navigating an increasingly uncertain financial landscape, and DeSoto Memorial Hospital in Arcadia is a clear example, according to Florida Hospital Association CEO and president Mary Mayhew.
Appearing on WUSF’s “Florida Live: Live & Local” on Wednesday, Mayhew highlighted the challenges smaller hospitals face in recruiting staff, managing aging infrastructure and providing specialized care.
The formula begins and ends with the costs of treating patients. Hospital labor costs alone in recent years have gone up over 25%, Mayhew said.
“Rural hospitals are often operating on very thin margins,” she told host Matthew Peddie. “They have fewer patients, lower reimbursements, and rising labor and equipment costs, which makes it difficult to sustain high-quality care locally.”
Nearly half of Florida’s 24 rural hospitals are operating in the red, Mayhew said. Five have closed since 2020.
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Insurance reimbursements play an outsized role, she said. At DeSoto Memorial, about 20% of patients rely on Medicaid, which pays only about 50 cents on the dollar.
“In rural communities, you are dealing with often a much higher percentage of Medicare and Medicaid (patients),” Mayhew said. “Those two payers pay far less than the cost of care. So, for a rural hospital, they have high fixed costs … and they often are receiving far less in reimbursement than what it costs to deliver that care.”
She added that “when you think about who uses hospitals, it’s our older population, who are often Medicare-funded. Medicare pays hospitals in Florida 80 cents on the dollar of cost, so hospitals are losing money on every patient. It’s hard to make that up in volume.”
Future reductions in Medicaid funding could accelerate the closure of rural hospitals, 2025 KFF data show. Federal and state policy decisions on Medicaid and Medicare payments will directly affect whether smaller hospitals can remain operational.
DeSoto County’s only hospital, DeSoto Memorial, has better options than what many other remote facilities face. Its board will choose from a 49-year lease with Tampa General Hospital, a sale to AdventHealth or a management agreement with NorthStar Hospitals.
Affiliating with larger health systems often provides economies of scale that smaller hospitals cannot achieve alone, Mayhew noted. The rural centers can benefit from existing back-office operations, which alleviates expenses. There is also value in investments such as new equipment, telehealth and remote patient monitoring, she said.
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“It’s not unusual across the country, and it's not just rural hospitals — it’s physician practices as well,” Mayhew said of such mergers. “If you're hemorrhaging red ink and trying to preserve access, hospitals often step in to support that. Electronic medical records are incredibly expensive but an absolute necessity for hospitals.”
DeSoto Memorial’s options would keep operations in the community and retain staff.
“Keeping local hospitals open isn’t just about health care — it’s about the local economy and community stability,” Mayhew said. “When hospitals close, it affects access to care and local jobs, and rural communities bear the brunt of that impact.”
Based in Tallahassee, the Florida Hospital Association represents and supports more than 200 hospitals and health care systems.
This story was compiled from interviews conducted by Matthew Peddie for "Florida Matters Live & Local." You can listen to the full episode here.
