Rural hospital closures affect more than health outcomes

When rural hospitals close, it takes a toll on local labor force, population, income, according to a new study

Rural hospital closures result in decreases to the labor forces and populations of their local counties, according to a new study.

Researchers analyzed 1,759 nonmetro counties across the United States from 2001 to 2018 and found 109 had a hospital close during that time, according to the study, “The Economic Effects of Rural Hospital Closures,” published by Health Services Research.

“Hospitals are cornerstones of many rural communities,” the study said. “In addition to medical care, rural hospital often provide boosts to local employment, income and population growth.”

When rural hospitals close, the effects can take years to emerge.

The study reported annual county income and county population size begin to decrease steadily several years after the closures.

However, “unlike with income and population size, the effect of closure on unemployment rate does not appear to follow a consistent trend.”

Changes to labor force size were more pronounced. A rural hospital closure “appears to significantly decrease labor force size” with the magnitude of the effect generally increasing over time, the study said.

Researchers noted the inconsistency between unemployment rates and size of the local labor force.

“One possible explanation for the inconsistency is that unemployed individuals migrate out of the county following hospital closure,” the study said. When a hospital closes, a substantial number of employed or unemployed people may leave the county, retire or stop looking for employment, which could lead to a stable or decreasing unemployment rate.

Among the 109 closed facilities, 59 were complete closures and 50 were conversions. There were 44 Critical Access Hospitals and 65 Prospective Payment Systems (PPS) Hospitals, as defined by the federal Centers for Medicare & Medicaid Services.

The economic effects were strongest after closing of the PPS hospitals, but less when a closed hospital was converted to another type of health care facility.

“Hospitals, policy makers, and rural stakeholders should consider conversion as an alternative to complete closure, as it could mitigate the economic shock on the surrounding community and protect access to important health services,” the report said.