Rural Hospitals

Federal Efforts Should Target Areas Where Closures Would Threaten Access to Care Gao ID: HRD-91-41 February 15, 1991

Pursuant to a congressional request, GAO examined the causes and consequences of rural hospital closures, focusing on the: (1) major factors associated with a higher risk of closure; (2) impact of hospital closure on rural communities and health care costs; and (3) role of Medicare in closures.

GAO found that: (1) between 1980 and 1988, 408 community hospitals closed in the United States; (2) between 1985 and 1988, the closure rate for rural hospitals was 29 percent higher than that for urban hospitals; (3) about one-third of the rural closures between 1980 and 1988 occurred in the southwest central region, with the largest number occurring in Texas; (4) both rural and urban hospitals that closed had substantial and increasing financial losses on patient care during the 3 years before closure; (5) a combination of such hospital characteristics as small size and low occupancy rate and such environmental characteristics as a weak economy and competition from other hospitals was associated with a higher closure risk; (6) physician recruitment and retention problems, failed management strategies, and uncompensated care were other important factors that contributed to financial distress and closure; (7) low Medicare payments did not increase closure risk for most rural and urban hospitals; (8) most rural hospital closures did not significantly reduce access to inpatient care, but some closures adversely affected access to care for vulnerable populations; (9) rural hospital closures did not significantly affect local economies, primarily due to the hospitals' small size and minimal monetary effects; and (10) despite federal initiatives to provide some relief for rural hospitals, generalized solutions may not adequately address the major problems facing individual hospitals.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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