The effect of rural hospital closures on community economic health

Health Serv Res. 2006 Apr;41(2):467-85. doi: 10.1111/j.1475-6773.2005.00497.x.


Objective: To examine the effect of rural hospital closures on the local economy.

Data sources: U.S. Census Bureau, OSCAR, Medicare Cost Reports, and surveys of individuals knowledgeable about local hospital closures.

Study design: 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.

Data collection: 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.

Principal findings: 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.

Conclusions: The local economic effects of a hospital closure should be considered when regulations that affect hospitals' financial well-being are designed or changed.

Publication types

  • Research Support, U.S. Gov't, Non-P.H.S.

MeSH terms

  • Health Facility Closure / economics*
  • Hospitals, Rural / economics*
  • Humans
  • Income*
  • Models, Econometric
  • Unemployment*