Rural and community hospitals are essential to the healthcare system, often providing critical care in underserved areas. However, they face unique financial challenges in comparison with  their urban and suburban counterparts.  

Factors such as low patient volumes, high operational costs, limited access to specialized services, and a greater reliance on Medicare and Medicaid reimbursement due to larger populations of older residents, and higher rates of poverty —put constant pressure on their revenue streams. 

As a result, half of the rural hospitals in the U.S. are operating at a deficit.  

In this challenging environment, innovative strategies like demand forecasting can provide a path forward, helping hospitals optimize their resources, anticipate patient needs, and enhance financial performance.   

The power of demand forecasting in healthcare 

Demand forecasting is crucial in mitigating risk and driving growth. It produces accurate, data-driven insights into trends related to patient volume, demographics, and service utilization in the present and the future. Rural hospitals can allocate resources more efficiently and plan to expand or reduce care offerings based on usage patterns and needs. By optimizing their offerings and operations, they can reduce waste and realize more revenue. Here are a few potential areas for strategic focus. 

Leveraging telemedicine and virtual care 

Telemedicine has become a critical tool for rural and community hospitals, enabling them to reach patients who might otherwise face barriers to care because of their geographic isolation or transportation challenges. In 2018 rural Americans were found to live an average of ten and a half miles or 17 minutes from the nearest hospital—about twice as far as people in suburban and urban areas 

How demand forecasting can help 

Demand forecasting can maximize the effectiveness of telemedicine initiatives. By analyzing  patient demographics, healthcare needs, and market penetration, hospitals can predict the demand for telehealth services in their area. These insights help prioritize services that are in the highest demand and allocate resources accordingly.   

For example, forecasting can identify which specialties or patient populations are most likely to use virtual care, guiding hospitals in tailoring their telemedicine offerings to meet those specific needs. This targeted approach ensures that investments in telehealth are aligned with both patient demand and financial goals, ultimately driving revenue growth. 

This can be especially helpful for older patients, those with lower incomes, and patients without reliable transportation. While rural Internet access continues to lag behind more populated areas, approximately 72 percent of rural residents have access to a broadband internet connection in their homes. Research has shown that rural residents have positive perceptions and experiences a – with telehealth adoption. 

However, rural hospitals must be strategic in how they implement these offerings. Using predictive analytics to forecast demand helps hospitals identify areas of care where needs are highest, and tailor virtual care services accordingly.  

Predictive analytics can also project adoption rates and market penetration for telemedicine services, enabling hospitals to align their investments with their financial resources and goals. This helps reduce risk and maximize potential revenues.   

Optimizing resources for greater efficiency 

Rural hospitals often need help managing patient flow and capacity. Across the country, they are struggling with workforce shortages—not just doctors but nurses and technicians as well—and a lack of other resources. This results in costly inefficiencies when services are underutilized or overloaded during times of high demand.   

When hospitals optimize capacity and patient throughput, they can maximize bed occupancy and minimize bottlenecks in care delivery. By analyzing data related to peak periods, seasonal trends, and other factors, hospitals can use predictive modeling to anticipate surges and quieter periods more accurately.  

Hospitals can also adjust staffing levels to meet specialty care needs and reduce downtime, manage bed availability, and budget for the appropriate amount of inventory. These efforts can result in shorter wait times for physicians and beds, increasing patient satisfaction. Overall, eliminating inefficiencies and aligning services with demand helps rural hospitals improve their financial performance. 

Expanding outpatient and ambulatory care services 

As inpatient admissions decline in many regions, outpatient services—such as urgent care, diagnostic imaging, and specialty clinics—have become critical revenue drivers for rural hospitals. These services provide accessible care for patients  and also generate new revenue streams by attracting individuals who may not need to be admitted to the hospital.  

Expanding outpatient services requires strategic investment, particularly in rural settings where competition from larger hospitals or private providers can be fierce. Demand forecasting can help hospitals identify which outpatient services are most needed by their local community.  

By analyzing patient data, demographic trends, and healthcare utilization patterns, hospitals can prioritize investments in services that are likely to yield the highest return on investment.  

Additionally, forecasting models can simulate different scenarios, allowing hospitals to assess the profitability of potential expansions. This data-driven approach ensures that hospitals focus on services that will meet community needs and contribute to long-term financial sustainability.

Maximize Reimbursement and revenue cycle management 

Rural hospitals often experience complex billing processes, high claim denial rates, and difficulties with cash flow due to the high proportion of patients on Medicare and Medicaid, which can delay reimbursement. 

Data analytics can make revenue cycle management more efficient, reducing financial strain. When used to investigate billing errors and claim denials, hospitals can identify patterns and make necessary adjustments accordingly, such as using automated tools to check claims for mistakes before they are submitted, speeding up the payment process.  

In addition, analytics tools provide helpful insights into cash flow, enabling hospitals to predict revenue more accurately and inform their financial and budget planning.   

Develop specialty care services 

For many rural hospitals, offering niche specialty services can be a key differentiator, attracting patients who might otherwise seek care at larger, urban facilities. However, developing these services requires significant staff, equipment, and infrastructure investment, and there is always the risk that patient volumes will not be sufficient to justify the costs. 

Demand forecasting can mitigate these risks by providing hospitals with the data they need to make informed decisions about specialty care development. By analyzing regional healthcare data and patient demographics, hospitals can assess the demand for specific specialties in their community.

For example, forecasting might reveal a high demand for cardiology services in a particular region, guiding the hospital’s investment in cardiology staff and equipment.  

Demand forecasting also supports continuous evaluation, allowing hospitals to monitor patient volumes and adjust their specialty offerings over time to align with community needs. This strategic approach ensures that specialty services are both profitable and sustainable.  

Take proactive steps for financial stability 

Ensuring long-term sustainability requires rural hospitals to take action. Demand forecasting is a key tool in this effort, offering hospitals the insights they need to adapt to changing patient needs, optimize resource allocation, and explore new revenue opportunities.  

By regularly forecasting demand for services, hospitals can better align their resources with expected patient trends, avoiding unnecessary costs while capitalizing on growth opportunities. Whether through expanding telemedicine, optimizing resource use, growing outpatient services, or developing specialty care, demand forecasting helps rural hospitals make informed decisions that drive revenue growth and financial stability.