From Zip Code to Health Code: Solving the Crisis of Care Deserts
As rural hospitals face financial collapse, a new CMS model could make things worse
Across the country, “care deserts” (regions with little or no access to essential healthcare services) are expanding. And while the crisis isn’t new, a looming policy shift from CMS could quietly accelerate it.
On January 1, 2026, the Transforming Episode Accountability Model (TEAM) will go live, making bundled payments mandatory for nearly 800 hospitals. For many rural facilities already struggling to stay open, the model’s full-risk structure could be the tipping point.
It’s a moment of reckoning for healthcare equity in America. But it’s also an opportunity to act.
What Are Care Deserts?
Over the past two decades, nearly 200 rural hospitals have closed, and according to the Center for Healthcare Quality and Payment Reform, another 700 are at risk. Some states, like Texas, have already lost over two dozen hospitals and could lose half of what remains unless conditions improve.
This report from Vox details one example of how care deserts are created, but it is by no means unique:
When St. Mark’s Medical Center in La Grange, Texas, closed its doors in 2023, the ripple effects were immediate. EMS responders now must drive patients over an hour to the nearest facility. Staff were laid off. Services vanished. And the community lost not just a hospital, but a safety net.
In rural communities, the local hospital often is the health care system, providing everything from emergency care and outpatient services to lab tests, OB care, and chronic disease management. When these institutions vanish, there’s nothing to replace them.
Why Hospitals Are Closing
The reasons are complex, but most boil down to one thing: finances.
Rural hospitals care for fewer patients than urban centers, but the fixed costs of running a hospital (staff salaries, equipment, building maintenance) remain high. That creates a dangerous imbalance: high costs, low revenue.
To make matters worse, many rural hospitals rely heavily on Medicare and Medicaid. These public programs reimburse well below cost (about 83 cents per dollar spent on average according to the American Hospital Association). Even private insurance often pays less in rural areas and can delay contract negotiations, which may create devastating budget shortfalls.
Then there’s Medicare Advantage, the fastest-growing option for seniors. While it’s marketed as a modern alternative, it frequently pays late—or not at all—creating new layers of risk for already fragile systems.
When hospitals can’t cover costs, they start making cuts. First go specialty services like OB and cancer care. Then inpatient care. Then the hospital closes.
Enter TEAM: A New Challenge
The CMS TEAM model aims to streamline care by holding hospitals accountable for outcomes and for costs across an entire episode of care, from surgery to post-discharge recovery.
For hospitals on the edge, this well meaning mandate could be catastrophic, but proper navigation of the model can actually increase margins.
TEAM requires hospitals to take on financial risk for patients up to 30 days after discharge. That includes costs for readmissions, post-acute care, physical therapy, and more. Many large systems are already preparing, but for small rural hospitals with no experience in bundled payments (or limited infrastructure to track outcomes post-discharge) this mandate could be a death sentence.
Hospitals must do more than meet performance targets. They must prove it with data, coordination, and timely reporting.
The Cost of Doing Nothing
Letting rural hospitals shoulder this new risk without support hazards deepening care deserts across the country. Every closure means longer travel times for emergencies, delayed treatments, and worse outcomes.
It’s a health equity issue. A business issue. And a public health issue. One that will only grow unless we build new models of support.
Strengthening Rural Health Through Partnership
Lonr Health was built for this.
We partner with hospitals to manage the full episode of care, bringing the infrastructure, clinical expertise, and high-touch model needed to succeed under TEAM, without adding more to your plate.
For rural hospitals, TEAM doesn’t have to be a financial threat. With the right partner, it’s a powerful opportunity.
Our TEAM Method combines data-driven triage with compassionate, around-the-clock care coordination to guide patients through surgery and recovery. The results speak for themselves:
- Improved surgical bundle performance
- 4% 30-day readmission rate (compared to 10–15% national average)
- 13.5% average MLR reduction
This kind of performance can help rural hospitals do more than stay afloat—it can help reverse the trend of disappearing care in America’s underserved regions.
Because no one’s ZIP code should determine whether or not they have a hospital.
Let’s protect what matters.
If you’re a rural hospital navigating TEAM, don’t go it alone. Lonr is ready to partner with you to protect access, improve equity, and make bundled payments sustainable for all.