Rural hospital closures led to higher prices at nearby hospitals

Rural hospital closures directly impact the health of rural Americans by reducing access to care. New research from the University of Minnesota School of Public Health sheds light on another consequence of these closures: rising prices at “surviving” rural hospitals. This first-of-its-kind analysis shows that when a rural hospital closes, it eliminates a low-price, potentially more affordable hospital from the region. Moreover, commercial prices at nearby hospitals increased by 3.6% in the years following a closure.

The research team analyzed 54 rural hospitals that closed between 2014 and 2018. To gauge price differences in the years before and after each rural hospital closure, the researchers tracked prices at the three nearest surviving hospitals from 2012 to 2022.

The study, published in Health Affairs, found:

• After a hospital closed, commercial prices for inpatient treatment increased by 3.6% at surviving hospitals—an average of about $500 per inpatient stay.
• The highest price increases were concentrated among surviving hospitals with market power—hospitals with system affiliations and hospitals operating in less competitive markets.
• Rural hospitals that eventually closed charged about 6% less than nearby hospitals, so their closure moved patients into higher-priced facilities and eliminated low-price options from the market.

“When rural hospitals close, patients—including those with time-sensitive health conditions—have a harder time accessing care,” said Caitlin Carroll, an assistant professor in the School of Public Health and lead author. “There is an additional concern—that rural hospital closure can lead to higher prices and erode affordability, even for patients who didn’t use the closed hospital when it was still in business.”