Comparison of Rural Hospital Closures and the Communities Served, 1990-2020

Lead researcher:
Project funded:
September 2020
Project completed:
December 2021

After the advent of the inpatient Prospective Payment System (IPPS) in 1983, many rural hospitals closed. The closure rate was so considerable and noteworthy that Federal Office of Rural Health Policy (FORHP) was created, and the General Accounting Office produced annual reports on the rate of closures from 1987-1992.

In response, policymakers designed and implemented special hospital payment designations, the Sole Community Hospital, the Medicare Dependent Hospital and the Critical Access Hospital (CAH), and the rate of closures abated from the late 1990s through the first part of the 21st century. However, an increase in the rate of rural hospital closures since 2010 has once again increased the attention of media, residents, researchers, and policymakers to the healthcare issues of rural America. Since 1990, there have been almost 500 rural hospital closures; roughly 60% of these closures occurred in the South census region, and 25% occurred in the Midwest census region. Understanding more about the similarities and differences of where hospitals are closing may help us mitigate the problem through targeted approaches.

The research aims of this study were to examine rural hospital closures during three periods of time. Researchers initially specified these as 1990-1998, 1999-2008, and 2009-2020 but considered alternative time periods based on the data. For example, 2010 or 2014 may be more important for their role in Affordable Care Act implementation. These periods of time are marked by factors considered to be "major disrupters" to the rural healthcare environment, the implementation of the CAH program in 1998 and the Great Recession of 2008, and its subsequent policy development, such as the American Recovery and Reinvestment Act of 2009 as well as the passage and implementation of the Patient Protection and Affordable Care Act. The aims were to profile the:

  • Demographic, socioeconomic, and geographic characteristics of communities where rural hospitals have closed; and
  • Health status and healthcare services and resources available within communities where rural hospitals have closed.

These profiles were then compared to comparison counties, such as counties that had no hospital in the beginning of the study period as well as those counties not losing a hospital. To the extent the data were available, researchers accounted for differential impacts of complete closure (no health care provided) and conversion (non-acute care, such as long-term care or urgent care provided); these data were not as readily available for the earlier parts of the study period.

Policymakers with a focus on rural areas are proposing solutions, such as developing new methods of healthcare delivery and payment and updates of aged rural infrastructure. While these healthcare delivery reforms may mitigate future rural hospital closures, more targeted methods cannot be proposed without empirical research from closed rural hospital data.