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Economic Consequences of Hospital Closures

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  • Diane E. Alexander
  • Michael R. Richards

Abstract

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 more impactful in areas experiencing complete closures. Aggregate consumer financial health and housing markets appear unaffected by the shuttering of a rural hospital.

Suggested Citation

  • Diane E. Alexander & Michael R. Richards, 2021. "Economic Consequences of Hospital Closures," NBER Working Papers 29110, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:29110
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    Cited by:

    1. Alex Hollingsworth & Krzysztof Karbownik & Melissa A. Thomasson & Anthony Wray, 2024. "The Gift of a Lifetime: The Hospital, Modern Medicine, and Mortality," American Economic Review, American Economic Association, vol. 114(7), pages 2201-2238, July.
    2. Rebucci, Alessandro & Bai, Ge & Jiménez, Daniel & Phan, Phillip & , & Sun, Xian, 2021. "The Financial Fragility of For-profit Hospitals: Evidence from the COVID-19 Pandemic," CEPR Discussion Papers 16650, C.E.P.R. Discussion Papers.

    More about this item

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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