Economic Consequences of Hospital Closures

Economic Consequences of Hospital Closures

Diane E. Alexander & Michael R. Richards

 

 

Hospitals anchor much of US health care and receive a third of all medical spending, including various subsidies. Nevertheless, some become insolvent and exit the market. Research has documented subsequent access problems; however, less is understood about broader implications. We examine over 100 rural hospital closures spanning 2005-2017 to quantify the effects on the local economy. We find sharp and persistent reductions in employment, but these localize to health care occupations and are largely driven by areas experiencing complete closures. Aggregate consumer financial health is only modestly affected, and housing markets were already depressed prior to hospital closures.