The bystander effect: Impact of rural hospital closures on the operations and financial well-being of surrounding healthcare institutions

Abstract

Introduction: There is presently a rural hospital shortage in the United States with 180 closures since 2005 and hundreds of institutions in financial peril. Although the hospital closure phenomenon is well-established, less is known about the spillover impact on the operations and financial wellbeing of surrounding hospitals. This preliminary study quantified how discrete rural hospital closures impact institutions in their regional proximity, finding a significant increase in inpatient admissions and emergency department visits for these “bystander hospitals”. Methods: Using a repository of rural hospital closures collected by the UNC Sheps Center for Health Services Research, we identified closures over the past 15 years. Criteria for inclusion were hospitals that had been fully closed between 2005–2016 and with >25-bed capacity. We then designated surrounding hospitals within a 30-mile radius of each closed hospital as “bystander hospitals.” We examined the average rate-of-change for inpatient admissions and emergency department visits in surrounding hospitals both two years before and after relevant hospital closures. Results: We identified 53 hospital closures and 93 bystander hospitals meeting our criteria during the study period. With respect to geographic distribution, 66% of closures were in the Southern US, including 21% in Appalachia. Average emergency department visits increased by 3.59% two years prior to a hospital's closure; however, at two years post-closure the average rate of increase rose to 10.22% (F (4,47) = 2.77, p = 0.0375). Average bystander hospital admissions fell by 5.73% in the two years preceding the hospital closure but increased 1.17% in the two years after (F (4,46) = 3.05, p = 0.0259). Conclusion: These findings predict a daunting future for rural healthcare. While previous literature has described the acute effects hospital closures have on communities, this study suggests a significant spillover effect on hospitals within the geographic region and a cyclical process at play in the rural healthcare sector. In the absence of significant public health assistance in regions affected by closures, poor health outcomes, including “diseases of despair,” are likely to continue proliferating, disproportionately affecting the most vulnerable. In the COVID-19 era, it will be especially necessary to focus on hospital closures given increased risk of maintaining solvency due to delayed and deferred care atop already tight margins.