Impact of Rural Hospital Closures on Healthcare Costs

Recent research from the University of Minnesota School of Public Health highlights a significant consequence of rural hospital closures: increased healthcare costs at neighboring facilities. The study demonstrates that the closure of rural hospitals not only affects access to care but also drives up prices in the surrounding healthcare market.

The analysis examined 54 rural hospitals that shut down between 2014 and 2018 and tracked the pricing strategies of the three nearest surviving hospitals from 2012 to 2022. Findings indicate that commercial prices for inpatient treatment surged by an average of 3.6% at these surviving hospitals following the closure of a nearby facility, equating to approximately $500 more per inpatient stay.

The study reveals that rural hospitals that eventually closed typically charged about 6% less than their counterparts, meaning their closure forced patients toward higher-priced alternatives, thereby eliminating lower-cost options from the local healthcare landscape.

Moreover, the price hikes were primarily concentrated in hospitals that possessed greater market power, such as those affiliated with larger health systems or those situated in less competitive areas. This trend raises concerns about the long-term implications of rural hospital closures on healthcare affordability.

As explained by the lead researcher, the implications extend beyond just access to care. Patients, particularly those facing urgent health conditions, face additional barriers once a rural hospital closes. The increase in prices at surviving hospitals may further complicate the financial viability of healthcare for many rural residents, even for those who did not utilize the closed facility.

This research underscores the need for policymakers to address the challenges surrounding rural hospital sustainability and the implications such closures have on healthcare costs and access. The findings were published in the journal Health Affairs.