Economic Impact of Labor and Delivery Unit Closure

Since 2020, more than 100 rural hospitals across 36 states have closed their labor and delivery (L&D) units, leaving fewer than half of rural hospitals nationwide offering hospital-based maternity care as of June 2025. These closures may exacerbate already long travel times for rural residents seeking maternity services and, in some cases, contribute to worse maternal health outcomes. Beyond public health implications, L&D unit closures may also affect local rural economies. Prior research demonstrates that full hospital closures can negatively impact community economic conditions, but little is known about whether the loss of hospital-based maternity services alone influences population trends or labor markets through migration and labor force participation.

This study examines the economic effects of rural hospital-based L&D unit closures, focusing on county-level population and labor force size. Specifically, we ask: What is the effect of L&D unit closure on local population and labor force outcomes in rural counties? To our knowledge, no prior studies have directly addressed this question, and this project will provide the first empirical estimates of these effects.

We hypothesize that L&D unit closures will be associated with declines in county population and labor force size, with the largest effects observed among adults aged 18–49. This demographic group may be particularly sensitive to the availability of local maternity care, influencing decisions about where to live and work. We also explore secondary economic outcomes, including county income and unemployment rates, though we expect these effects to be modest based on prior research on complete hospital closures.

We will use county-level data from the U.S. Census Bureau and Bureau of Labor Statistics to measure population and labor force outcomes. Information on L&D unit closures will be drawn from publicly available data from the University of Minnesota Rural Health Research Center. The analysis will be conducted at the county level using a difference-in-differences design, comparing counties that experienced complete loss of hospital-based L&D services with counties that did not. Models will adjust for baseline differences using key covariates such as Census division, degree of rurality, and economic typology.

Findings from this study will inform FORHP, policymakers, and rural health stakeholders about the broader economic importance of hospital-based L&D units and support policies aimed at sustaining the health and economic vitality of rural communities.