The Effect of Rural Hospital Closures on Community Economic Health

Cecil G.Sheps Center for Health Services Research, University of North Carolina at Chapel Hill, Chapel Hill, NC, USA.
Health Services Research (Impact Factor: 2.78). 05/2006; 41(2):467-85. DOI: 10.1111/j.1475-6773.2005.00497.x
Source: PubMed


To examine the effect of rural hospital closures on the local economy.
U.S. Census Bureau, OSCAR, Medicare Cost Reports, and surveys of individuals knowledgeable about local hospital closures.
Economic data at the county level for 1990-2000 were combined with information on hospital closures. The study sample was restricted to rural counties experiencing a closure during the sample period. Longitudinal regression methods were used to estimate the effect of hospital closure on per-capita income, unemployment rate, and other community economic measures. Models included both leading and lagged closure terms allowing a preclosure economic downturn as well as time for the closure to be fully realized by the community.
Information on closures was collected by contacting every state hospital association, reconciling information gathered with that contained in the American Hospital Association file and OIG reports.
Results indicate that the closure of the sole hospital in the community reduces per-capita income by 703 dollars (p<0.05) or 4 percent (p<0.05) and increases the unemployment rate by 1.6 percentage points (p<0.01). Closures in communities with alternative sources of hospital care had no long-term economic impact, although income decreased for 2 years following the closure.
The local economic effects of a hospital closure should be considered when regulations that affect hospitals' financial well-being are designed or changed.

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    • "A hospital is often one of the largest employers in a rural community, and previous research has shown that a closure leads to a shortrun decrease in per-capita income and an increase in the unemployment rate[9]. If a community loses its only hospital , the cost can be permanent; one estimate suggests this cost is a $703 decrease in the per-capita income of a community (in 1990 dollars—approximately $1,300 today)[9]. Given the average rural county population, this translates to roughly $30 million lost from rural county residents as the result of a closed hospital. "

    Preview · Article · Jan 2015 · North Carolina medical journal
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    • "Since the last spate of conversions in the early 1990s, we have learned a great deal about the effects of hospital ownership in urban settings. However, despite claims that hospitals are the heart of rural health systems (Holmes et al. 2006) and for-profit ownership may harm rural health services (Moscovice and Stensland 2002), researchers have largely studied ownership in the urban context. "
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    ABSTRACT: To test whether nonprofit, for-profit, or government hospital ownership affects medical service provision in rural hospital markets, either directly or through the spillover effects of ownership mix. Data are from the American Hospital Association, U.S. Census, CMS Healthcare Cost Report Information System and Prospective Payment System Minimum Data File, and primary data collection for geographic coordinates. The sample includes all nonfederal, general medical, and surgical hospitals located outside of metropolitan statistical areas and within the continental United States from 1988 to 2005. We estimate multivariate regression models to examine the effects of (1) hospital ownership and (2) hospital ownership mix within rural hospital markets on profitable versus unprofitable medical service offerings. Rural nonprofit hospitals are more likely than for-profit hospitals to offer unprofitable services, many of which are underprovided services. Nonprofits respond less than for-profits to changes in service profitability. Nonprofits with more for-profit competitors offer more profitable services and fewer unprofitable services than those with fewer for-profit competitors. Rural hospital ownership affects medical service provision at the hospital and market levels. Nonprofit hospital regulation should reflect both the direct and spillover effects of ownership.
    Full-text · Article · Jun 2011 · Health Services Research
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    • "For instance, Pearson and Tajalli (2003) used pre-and post-hospital closure data for 24 USA communities and 24 controls and found no evidence of short-or long-term harm to community economies. Holmes et al. (2006) differentiated between the impact of closure of one hospital in a community and closure of the only hospital. Losing the sole hospital in a county resulted in decreased income and employment. "
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    ABSTRACT: Health services are suggested to contribute to remote communities in the ways that extend beyond healthcare delivery. This international multiple case-study research provides qualitative evidence of the social, economic and human contributions (the 'added-value') that may be lost should remote communities lose in-situ health provision. We present a typology of added-value contributions that differentiates institutional aspects (residing in buildings, or embodied in the specific status, capabilities and skills of health professionals) and individual aspects (attributable to health professionals' unique personalities and choices). This typology has relevance for communities, policymakers and managers when considering the impacts of potential service changes.
    Full-text · Article · Nov 2010 · Health & Place
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