Economic Impact of Hospital Closure on Small Rural Counties, 1984 to 1988: Demonstration of a Comparative Analysis Approach

Abstract

Hospital closure in a rural community may affect the locale's economic prospects as well as the health of its residents. Studies of economic effects have primarily relied on modeling techniques rather than observation of actual change. This study demonstrates the use of a comparative analysis approach for estimating the economic effects of hospital closure on small rural counties. The experiences of 103 small rural counties at which a hospital closed between 1984 and 1988 was compared with a matched group of counties at which no closure took place. "Comparable" counties were selected based on seven scales measuring the similarity between a closure county and potential comparisons. Three scales examined population and economic characteristics in the year before closure; two scales measured change throughout a three-year period preceding closure; and two scales measured change throughout a five-year period preceding closure. Closure effects were measured through a multivariate analysis of the post-closure economic history of closure and comparison counties. The key assumption is that similar counties should have similar experiences over time. If an event occurs within some of these counties but not others, this event should have visible effects. Comparative analysis suggested that earned income in closure counties (excluding farming and mining income) was lower than in comparison counties subsequent to closure and that labor force growth was similarly affected. A comparative analysis approach produces results that parallel those obtained from economic modeling and should be considered for further research.

The Effect of Rural Hospital Closures on Community Economic Health

“…The difficulty, of course, is that the counterfactual is not observed for counties that do not experience a closure; this must be estimated. If hospital closures are not correlated with unobserved factors, then one could estimate models using, for example, a propensity‐score approach as used by Probst et al (1999). An alternative method (Stensland et al 2002), is to use a longitudinal approach and compare the outcomes for closure counties with the outcomes of nonclosure counties (used as the estimate of the counterfactual).…”

“…Five economic indicators were examined for trends and none were found to have had a statistically significant change following closure of the hospital. Similarly, Probst et al (1999) compared economic indicators in closure communities to a control group of nonclosure communities and failed to find a statistically significant difference in income trends in the closure counties relative to the comparison counties. Stensland et al (2002) examined the effect of 42 hospital closures in rural Appalachian communities and concluded that the closure had no effect on short‐term or long‐term economic growth of those areas.…”

Person and Place: The Compounding Effects of Race/Ethnicity and Rurality on Health

“…A South Carolina study found that National Health Service Corps physician alumni, in addition to serving rural and racial/ethnic minority populations, 83 generated an estimated $15 million in annual billings (in 1998) per county in rural HPSA counties. 84 Conversely, the loss of health care providers as employers within small rural counties has significant detrimental economic consequences. 85 …”

Disparities in Access to Care Among Rural Working‐age Adults

“…Research has already shown that the closure of rural hospitals, often a major employer, can have significant economic effects on the community. 50 Short-run studies should be done at the state level to document how cutbacks in Medicaid, or of differential funding for elementary and secondary education in rural minority and poverty counties, affect health outcomes. On the positive side, research needs to identify, document, and replicate examples of successful collaboration between health care institutions and economic development systems.…”