The Gloves Don’t Fit: The Invisible Hand and Rural Health Care

Welcome to Advocacy Corner, a monthly series of nonpartisan advocacy posts by the Natrona Collective Health Trust, aimed at advancing our mission of improving the health of Natrona County residents. Each month, we explore key issues that impact community well-being, providing insights and information to empower residents. If you have a topic suggestion or question, please reach out to Rachel Bouzis, Director of Policy & Learning.

As consumers, we all have a basic understanding of economics by sheer practice. We compare prices in grocery stores, softness in sweaters, number of bedrooms in a home, or same day delivery. When we’re looking to purchase something, competition is essential. This intuitive behavior is, of course, illustrative of Adam Smith’s invisible hand metaphor positing that when individuals act in their own self-interest, they’re unintentionally working toward the public good in a free market. Perhaps because the phrase is so overused and oversimplified, society believes competition always leads to better outcomes—an assumption that falters in rural health care. When the stakes are life and death, health care feels bigger than economics, but it is still bound by them.

High fixed costs, low patient volumes, and workforce shortages all make rural health care fragile; competition could make it combustible. Markets like groceries, clothing and housing function because consumers can compare, delay, or choose alternatives. Health care is different in that we don’t want to use it. Routine preventative appointments are largely the exception; rather we’re forced into it, and this is often under urgent or even catastrophic circumstances. Because patients cannot shop around or delay care, demand is inelastic, and the usual competitive pressures that drive efficiency and quality cannot operate.

The supply side of the rural health care market isn’t much better. It is extremely expensive to operate a hospital. The recoil from medical bills makes sympathy for a hospital tough, but fixed costs are, well, fixed. In health care, fixed costs are high. You won’t find an efficiency that will meaningfully lower the cost of delivering a baby.

Maternity wards are a rural health care microcosm. They require specialized staff, equipment and facilities available 24 hours a day year-round. A hospital is only paid when a delivery actually occurs, and there are only so many babies born every year in small communities. Because patient pools are small and unpredictable, hospitals often end up covering the gap themselves.

Hospitals walk a financial tightrope, weighing community care against operational survival. They can put the entire facility at financial risk by continuing to provide these essential services and hope that other, more profitable departments cover the deficit. A safer bet is to close the unviable ones. In 2024, around one-third of all U.S. counties including four in Wyoming did not have an obstetric provider or birthing facility.[1] Necessity and profitability don’t always align.

Wyoming’s maternity desert is well documented (I wrote about it in August), but it’s far from the only essential service rural hospitals are losing. Oncology care faces the same untenable tension: high fixed costs and low patient volume. Last fall, Powell Valley Healthcare in Cody closed its oncology center with just 21 days of cash on hand[2]. Hospitals are considered financially vulnerable with anything less than 100.[3] In 2025, the Wyoming Hospital Association reported that four Wyoming hospitals currently had just four days of cash on hand.[4]

Further straining these bottom lines, rural hospitals are more reliant on Medicare than urban hospitals. In 2023, Medicare covered 53% of rural hospital discharges compared to 45% at urban hospitals.[5] Depending on the location and service, private insurers pay anywhere from 141% to a whopping 259% of Medicare rates.[6] Medicaid pays even less, roughly 30% lower than Medicare, and covers around 19% of rural discharges[7]. Meanwhile increases to private insurance prices have soared relative to Medicare or Medicaid. From 2014 to 2024, private rates increased by 50% compared to 25% and 19% in Medicare and Medicaid respectively.[8] In a world of staggering deductibles and painful out-of-pocket payments, this is a big problem for consumers.

Staffing challenges further compound these pressures. Physicians are in high demand across the country, and Wyoming isn’t for everyone. Today, just 10% of physicians practice in rural areas[9], and the outlook is only worsening. Shortage projections range from 86,000 physicians in 2036[10] to as many as 141,000 by 2038.[11] Currently, around half of rural physicians are 50 or older.[12]

This environment has made it increasingly difficult for rural hospitals to remain without economies of scale. This reality has driven a steady decline in independently owned hospitals, particularly in rural areas: in 2010, 57% of rural hospitals were independently owned. In 2023, that decreased to 48%.[13] Being part of a larger health system allows hospitals to absorb low patient volumes more effectively and subsidize low-profit services such as maternal care and oncology.

Reconciling the dire financial state of hospitals with the fact that 20 million adults carry medical debt, 3 million of whom owe more than $10,000[14], requires some serious mental gymnastics. Clearly, the system isn’t working. Maybe we need to rethink how health care is distributed and financed. But that’s not an option for today. For those of us who need the care we don’t want, we must make do with the system we have — because it is infinitely better than no care at all.

Frighteningly, having no care is a very real possibility. Hospital closures outpaced openings in rural areas from 2017 to 2023[15], and the threats to Wyoming are real. Six hospitals are at risk of closing, with three potentially facing closure within just two to three years, according to Becker’s Hospital Review.[16]

More is not better for rural hospitals. There are just too many other threats, and adding another hospital to a market that’s already fighting for patients, providers, and federal reimbursement is not healthy. Competition in these circumstances is far more likely to deliver the final blow than to improve outcomes. It’s basic economics.

Sources:

[1] Nowhere to Go: Maternity Care Deserts Across the US

[2] Powell hospital cuts oncology, Cody clinic to improve finances

[3] Most Nonprofit Hospitals and Health Systems Had “Strong” Days of Cash on Hand in 2022, Though About One-in-10 Were “Vulnerable”

[4] Recent hospitals further strained by recent legislation, says WHA chief

[5] 10 Things to Know About Rural Hospitals

[6] How Much More Than Medicare Do Private Insurers Pay? A Review of the Literature

[7] Key Facts About Hospitals

[8] Key Facts About Hospitals

[9] The Physician Workforce Under Pressure: From Shortage to Strategy

[10] New AAMC Report Shows Continuing Projected Physician Shortage

[11] Health Workforce Projections

[12] The Physician Workforce Under Pressure: From Shortage to Strategy

[13] Key Facts About Hospitals

[14] The burden of medical debt in the United States

[15] Key Facts About Hospitals

[16] 734 hospitals at risk of closure, by state