Hospital closure and economic efficiency

Cory Capps, David Dranove, Richard C. Lindrooth*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

44 Scopus citations

Abstract

We present a new framework for assessing the effects of hospital closures on social welfare and the local economy. While patient welfare necessarily declines when patients lose access to a hospital, closures also tend to reduce costs. We study five hospital closures in two states and find that urban hospital bailouts reduce aggregate social welfare: on balance, the cost savings from closures more than offset the reduction in patient welfare. However, because some of the cost savings are shared nationally, total surplus in the local community may decline following a hospital closure.

Original languageEnglish (US)
Pages (from-to)87-109
Number of pages23
JournalJournal of Health Economics
Volume29
Issue number1
DOIs
StatePublished - Jan 1 2010

Keywords

  • Health care
  • Health insurance
  • Healthcare
  • Hospitals
  • Policy making

ASJC Scopus subject areas

  • Health Policy
  • Public Health, Environmental and Occupational Health

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