This study compares the profitability of urban and rural hospitals paid under PPS (U-PPS and R-PPS, respectively) to rural hospitals with special Medicare payment provisions between 2007 and 2009. R-PPS hospitals are subdivided by bed size (<26, 26-50 and >50) to assess differences within the group. Financial ratios are used to compare the profitability of hospital groups, and percentages of hospitals with negative total margins are used as a sign of financial distress.