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The Impact of Hospital Closures on Medical Debt in Collections: Analysis Using Consumer Credit Bureau Data

Author

Listed:
  • Andre, Jennifer

    (Urban Institute)

  • Blavin, Fredric

    (Urban Institute)

  • Braga, Breno

    (Urban Institute)

  • Gangopadhyaya, Anuj

    (Urban Institute)

Abstract

This study presents new evidence on the potential detrimental effects of hospital closures. We examine how hospital closures affect the likelihood of incurring medical debt. Hospital closures can increase market concentration by removing a competitor from the market. Closures can also have negative spillover effects on the local economy and affect the population's ability to pay their bills. We combine 2011-2020 consumer credit bureau data with information on hospital closures from 2014-2018 to assess the relationship between closures and medical debt. Using a stacked event study approach, we find that a closure that reduces hospital supply in a Hospital Referral Region (HRR) by 10 percent is associated with a 4 percent increase in the share of consumers with medical debt, with larger effects in HRRs that are urban and have higher rates of poverty. Moreover, we find that a hospital closure is associated with about a 6-8 percent increase in hospital market concentration. These findings suggest that the primary mechanism through which hospital closures affect medical debt is by reducing hospital competition in local markets.

Suggested Citation

  • Andre, Jennifer & Blavin, Fredric & Braga, Breno & Gangopadhyaya, Anuj, 2023. "The Impact of Hospital Closures on Medical Debt in Collections: Analysis Using Consumer Credit Bureau Data," IZA Discussion Papers 16448, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp16448
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    References listed on IDEAS

    as
    1. Zack Cooper & Stuart V Craig & Martin Gaynor & John Van Reenen, 2019. "The Price Ain’t Right? Hospital Prices and Health Spending on the Privately Insured," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(1), pages 51-107.
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    3. Martin Gaynor & Kate Ho & Robert J. Town, 2015. "The Industrial Organization of Health-Care Markets," Journal of Economic Literature, American Economic Association, vol. 53(2), pages 235-284, June.
    4. Brantly Callaway & Andrew Goodman-Bacon & Pedro H. C. Sant'Anna, 2021. "Difference-in-Differences with a Continuous Treatment," Papers 2107.02637, arXiv.org, revised Jan 2024.
    5. Buchmueller, Thomas C. & Jacobson, Mireille & Wold, Cheryl, 2006. "How far to the hospital?: The effect of hospital closures on access to care," Journal of Health Economics, Elsevier, vol. 25(4), pages 740-761, July.
    6. Goodman-Bacon, Andrew, 2021. "Difference-in-differences with variation in treatment timing," Journal of Econometrics, Elsevier, vol. 225(2), pages 254-277.
    7. Kyle J. Caswell & John H. Goddeeris, 2020. "Does Medicare Reduce Medical Debt?," American Journal of Health Economics, University of Chicago Press, vol. 6(1), pages 72-103.
    8. Alexander, Diane & Richards, Michael R., 2023. "Economic consequences of hospital closures," Journal of Public Economics, Elsevier, vol. 221(C).
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    medical debt; hospital closures; hospital competition;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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