Department  of Health  and Human  Services 
OFFICE  OF 
INSPECTOR  GENERAL 
HOSPITAL  CLOSURE:  1996 

JUNFi GIBBS  BROWN 
Inspector  General 
FEBRUARY  1998 
OEI-04-97-00110  OFFICE  OF INSPECTOR  GENERAL 
The  mission  of  the  Office  of  Inspector  General  (OIG),  as  mandated  by  Public  Law 
95-452,  is to  protect  the  integrity  of  the  Department  of  Health  and  Human  Services 
programs  as well  as  the  health  and  welfare  of beneficiaries  served  by  them.  This 
statutory  mission  is carried  out  through  a nationwide  program  of  audits,  investigations, 
inspections,  sanctions,  and  fraud  alerts.  The  Inspector  General  informs  the  Secretary 
of  program  and  management  problems  and  recommends  legislative,  regulatory,  and 
operational  approaches  to  correct  them. 
Office  of Evaluation  and  Inspections 
The  Office  of  Evaluation  and  Inspections  (OEI)  is one  of  several  components  of  the 

Office  of  Inspector  General.  It  conducts  short-term  management  and  program 

evaluations  (called  inspections)  that  focus  on  issues  of  concern  to  the  Department,  the 

Congress,  and  the  public.  The  inspection  reports  provide  findings  and 

recommendations  on  the  efficiency,  vulnerability,  and  effectiveness  of  departmental 

programs. 

The  OEIs  Atlanta  Regional  Office  prepared  this  report  under  the  direction  of  Jesse  J. 

Flowers,  Regional  Inspector  General,  and  Christopher  Koehler,  Deputy  Regional 

Inspector  General.  Principal  OEI  staff  included: 

Region  Headquarters 
Ron  Kalil,  Contractor  Tricia  Davis,  Program  Specialist 

Peggy  Daniel,  Program Analyst  Linda  Moscoe,  Technical  Support Staff 

Graham  Rawsthorn,  Program Analyst 

Jackie  Watkins,  Program Analyst 

To  obtain  a copy  of  this  report,  call  the  Atlanta  Regional  Office  at  404-331-4108. 
Reports  are  also  available  on  the  World  Wide  Web  at  our  home  page  address: 
http://www.dhhs.gov/progorg/oei.  Department  of Health  and Human  Services 
OFFICE  OF 
INSPECTOR  GENERAL 
HOSPITAL  CLOSURE:  1996 

4 SERVICQ 
.&  %u. 
9
JUNE  GIBBS  BROWN
/  Inspector  General 
-
FEBRUARY  1998 
d 
daa OEI-04-97-00110  EXECUTIVE  SUMMARY 
PURPOSE 
To  describe  extent,  characteristics,  reasons  for,  and  impact  of  hospital  closure  in  1996. 
BACKGROUND 
The  closure  of  hospitals  in  past  years  had  generated  public  and  congressional  concern. 
We released  a report  in  May  1989  describing  the  nationwide  phenomenon  of  hospital 
closure  in  1987.  We  issued  subsequent  annual  reports  in  1988  through  1995. 
The  findings  from  all the  OIG  studies  of  hospital  closure  are  similar.  The  hospitals 
that  closed  were  small  and  had  low  occupancy  rates.  When  the  hospitals  closed,  few 
patients  were  affected.  Most  could  get  medical  care  nearby. 
FINDINGS 
Our  inspection  of  hospital  closure  in  1996  produced  findings  similar  to  those 
previously  reported  for  1987-1995. 
b 	 Thirty-seven  general,  acute  care  hospitals  closed  -- 0.7  percent  of  all  hospitals. 
This  is the  same  number  that  closed  in  1995.  Four  new  general,  acute  care 
hospitals  opened  in  1996,  and  one  hospital  that  had  previously  closed  reopened 
in  1996. 
b 	 Ten  of  the  closed  hospitals  were  rural  and  27 were  urban.  A  higher  percentage 
of  urban  hospitals  (1.0%)  closed  in  1996  than  did  rural  hospitals  (0.4%). 
b 	 Closed  hospitals  in both  rural  and  urban  areas  were  smaller  on  average  than 
the  national  averages. 
Rural  hospitals  that  closed  had  an  average  of  27 beds  as  compared  to  an 
average  of  73 beds  for  all  rural  hospitals  nationally. 
Urban  hospitals  that  closed  had  an  average  of  110 beds  as  compared  to 
an  average  of  227  beds  for  all urban  hospitals  nationally. 
b 	 Occupancy  rates  for  closed  rural  and  urban  hospitals  were  lower  on  average 
than  the  national  averages. 
Rural  hospitals  that  closed  had  an  average  occupancy  rate  of  16.9 
percent  as  compared  to  an  average  of  33.2  percent  for  all  rural  hospitals 
nationally.  The  average  daily  census  in  the  year  prior  to  closure  was 
about  5 patients. 
i  Urban  hospitals  that  closed  had  an  average  occupancy  rate  of  34.2 
percent  as  compared  to  an  average  of  48.7  percent  for  all  urban 
hospitals  nationally.  The  average  daily  census  in  the  year  prior  to 
closure  was  about  38 patients. 
b 	 Medicare  utilization  of  closed  hospitals  on  average  was  lower  than  the  national 
average. 
In  rural  areas,  the  average  Medicare  utilization  among  hospitals  that 
closed  was  49.2  percent  compared  to  an  average  of  58 percent  for  all 
rural  hospitals  nationally.  About  two  Medicare  patients  were  in  the 
hospital  on  an  average  day  in  the  year  prior  to  closure. 
In  urban  areas,  the  average  Medicare  utilization  among  hospitals  that 
closed  was  46.7  percent  compared  to  an  average  of  48.4  percent  for  all 
urban  hospitals  nationally.  About  18 Medicare  patients  were  in  the 
hospital  on  an  average  day  in  the  year  prior  to  closure. 
Medicaid  utilization  of  closed  hospitals  on  average  was  lower  than  the  national 
b 	
averages. 
In  rural  areas,  the  average  Medicaid  utilization  among  hospitals  that 
closed  was  7.4 percent  as  compared  to  an  average  of  11.9  percent  for  all 
hospitals  nationally. 
In  urban  areas,  the  average  Medicaid  utilization  among  hospitals  that 
closed  was  11.9  percent  as  compared  to  an  average  of  14 percent  for  all 
urban  hospitals  nationally. 
b 	 No  single  factor  or  event  caused  hospitals  to  close.  Hospitals  closed  because  of 
the  interrelated  factors  of  declining  occupancy,  lagging  revenues,  and  rising 
costs.  Hospital  viability  depends  on  the  stability  of  all  three  factors.  The 
weakening  of  either  one  may  begin  a chain  reaction  eventually  leading  to 
hospital  closure. 
b 	 Although  residents  in  a few  communities  had  to  travel  greater  distances  for 
hospital  care,  most  had  emergency  and  inpatient  medical  care  available  within 
10 miles  of  a closed  hospital. 
b 	 At  the  time  of  our  inspection,  27 of  the  37 closed  hospital  facilities  were  being 
used  -- 23  of  them  (62  percent)  for  health-related  services.  Also,  plans  were 
being  made  to  use  6 of  the  remaining  10 vacant  hospitals  for  health-related 
services. 
ii  TABLE  OFCONTENTS 
EXECUTIVESUMMARY  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  i 

INTRODUCTION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1 

FINDINGS 
Extent  and  Characteristics  of  Closed  Hospitals  ......................  3 

How  Many  Closed  .......................................  3 

Where  Were  They  .......................................  4 

What  Were  They  Like  ....................................  4 

Reasons  for  Hospital  Closure  ....................................  7 

Impact  of  Hospital  Closure  .....................................  8 

How  Many  Patients  Were  Affected  ..........................  8 

Are  Inpatient  Care  and  Emergency 

Services  Available  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9 

What  Is the  Building  Used  for  Now  . . . . . . . . . . . . . . . . . . . . . . . . .  11 

ENDNOTES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12 

APPENDICES 
Methodology  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  A-l 
Number  of  Hospital  Closures  by  State  ...........................  B-l 
Hospital  Closures  by  Hospital  Name  and  Location  ..................  C-l  INTRODUCTION 
PURPOSE 
To  describe  the  extent,  characteristics,  reasons  for,  and  impact  of  hospital  closure  in 
1996. 
BACKGROUND 
In  the  past,  closure  of  general,  acute  care  hospitals  had  generated  public  and 
congressional  concern.  Numerous  questions  had  been  raised  about  the  impact  of 
hospital  closure  in  the  United  States,  as well  as implications  for  public  policy.  A 
number  of  studies  predicted  that  more  hospitals  would  close  in  coming  years. 
In  response  to  these  concerns,  the  Office  of  Inspector  General  released  a report  in 
May  1989  describing  the  phenomenon  of  hospital  closure  during  1987  in  the  United 
States.  We  found  that  the  hospitals  that  closed  were  small  and  their  closing  did  not 
severely  affect  access  to  care.  Many  users  of  our  1987  hospital  closure  study 
encouraged  us  to  continue  year-by-year  analyses  of  the  phenomenon  to  detect 
differences  in  the  rate  of  hospital  closure,  and  in  the  characteristics  and  circumstances 
of  hospitals  that  close. 
Similar  inspections  on  the  phenomenon  of  hospital  closure  in  1988  through  1994 
showed  a downward  trend  in  the  number  of  closures.  In  1995,  hospital  closures  more 
than  doubled  that  of  the  previous  year,  but  were  still  less  than  in  any  other  year  since 
we  began  this  series  of  reports. 
HOSPITAL  CLOSURE 
#  of  Closures  in  US. 
100  -
80  - 76 
69 
7 
so- 56  67 
40- 37 
20- 16 
/ 
O-	 I  I  I  I  I  I 
1967  1988  1989  1990  1991  11994  1996 
YEAR 
1 
 The  findings  from  the  1987  through  1995  inspections  were  similar.  The  hospitals  that 
closed  were  small  and  had  low  occupancy  rates.  When  the  hospitals  closed,  few 
patients  were  affected.  Most  could  get  medical  care  nearby. 
SCOPE 
We  examined  hospitals  that  closed  in  calendar  year  1996. 
For  purposes  of  this  study,  the  following  definitions  were  used. 
Hospital:  A  facility  that  provides  general,  short-term,  acute  medical  and  surgical 
inpatient  services. 
Closed  Hospital:  One  that  stopped  providing  general,  short-term,  acute  inpatient 
services  in  1996.  If a hospital  merged  with  or  was  sold  to  another  hospital  but  the 
physical  plant  continued  to  provide  inpatient  acute  care,  it was  not  considered  a 
closure.  If  a hospital  both  closed  and  reopened  in  1996,  it was  not  considered  a 
closure. 
METHODOLOGY 
To  determine  the  extent, reasons for,  and  impact of  hospital  closure,  we  obtained 
information  from  State  licensing  and  certification  agencies,  State  health  planning 
agencies,  State  hospital  associations,  HCFA  data  bases,  officials  associated  with  closed 
and  nearby  hospitals,  and  local  public  officials. 
We  obtained  information  on  the  characteristics of  all  hospitals  and  those  that  closed  in 
1996  from  the  Hospital  Cost  Report  Information  System  (HCRIS)  maintained  by 
HCFA. 
Appendix  A  describes  our  methodology  in  further  detail. 
We  conducted  our  review  in  accordance  with  the  Quality Standards for  Inspections 
issued  by  the  Presidents  Council  on  Integrity  and  Efficiency. 
2 
 FINDINGS 

Our  analysis  shows  that: 
b 	 Thirty-seven  general,  short-term,  acute  care  hospitals  closed  in  1996  -- 0.7 
percent  of  all  hospitals.  This  is the  same  number  that  closed  in  1995. 
b  Most  hospitals  that  closed  were  small  and  had  low  occupancy  rates. 
b 	 Although  residents  of  a few  communities  had  to  travel  greater  distances  for 
hospital  care,  most  had  emergency  and  inpatient  medical  care  available  within 
10 miles  of  a closed  hospital. 
EXTENTAND  CHARACl-ERISTICS  OF CLOSED  HOSPITALS 
How Many  Closed 
In  1996,  there  were  4,955  general,  short-term,  acute  care  hospitals  in  the  United  States 
entered  on  HCFAs  data  base  as  participating  in  the  Medicare  program.  Thirty-seven 
hospitals  closed  in  1996  -- 0.7 percent  of  all  hospitals  nationally. 
t 

i HOSPITALS  IN THE  U.S.:  4,955 

~CLOSEDINl996:  37  (0.7%) 

Closure  of  the  37 general,  acute  care  hospitals  reduced  inpatient  bed  supply  by  3,235 
beds,  or  0.4  percent. 
While  37 hospitals  closed  in  1996,  4 new  general,  acute  care  hospitals  opened,  adding 
589  beds  to  the  national  supply  of  beds.  In  addition  to  the  new  hospital  openings,  1 
previously  closed  hospital  reopened  in  1996,  adding  another  18 beds. 
3 
 where  Were Z%ey 
The  closed  hospitals  were  located  in  22 States.  California  had  the  greatest  number  of 

closures  (7),  followed  by  Florida  (4),  and  Texas  (4).  Three  States  had  two  closures 

each,  and  the  remaining  16 States  had  1 closure  each.  Appendix  B lists  the  number  of 

hospital  closures  by  State.  Appendix  C lists  the  closures  by  hospital  name  and 

location. 

A  higher  percentage  of  urban  hospitals  (1.0%)  closed  in  1996  than  did  rural  hospitals 

(0.4%). 

URBAN  RURAL 
HOSPITALS  IN THE  U.S.:  &al  &274 
CLOSED  IN 1996:  27 (1.0%)  10 (0.4%) 
What Were the Closed Hospital  Like 
k: 	 Hospitals  that  closed  in  1996  were  small.  Almost  two-thirds  (65%)  of  the 
hospitals  that  closed  had  100 beds  or  fewer.  The  average  number  of  beds  for 
hospitals  nationwide  is  156 beds. 
SIZE  OF CLOSED  HOSPITALS 
Number  of  Closed  Hospitals 
Rural  Urban 
Number  of  Beds 
0 - 30  7  2 
31 - 50  2  1 
51 - 100  1  11 
201  - 300  0 
301  >  0 
Totals  10 
4 
 Both  the  rural  and  urban  hospitals  that  closed  in  1996  were  smaller  on  average  than 
the  average  size  of  rural  and  urban  general,  acute  care  hospitals  nationally. 
HOSPITALS  THAT  CLOSED 
WERE  SMALL 
-#  of  Beds
260  226.7 
200 
-
160 
-
100 
60 
-
0 
RURAL  HOSPITALS  URBAN  HOSPITALS 
m  National  Avg  m  Closed  Hospital  Avg 
Occupancy:  Occupancy  rates  for  closed  rural  and  urban  hospitals  were  lower  on 
average  than  the  national  averages. 
OCCUPANCY  RATES  WERE  LOW 
60%  -
46.7% 
60%  -
40%  -
30%  -
20%  -
10%  -
O%
RURAL  HOSPITALS  URBAN  HOSPITALS 
m  National  Avg  m  Closed  Hospital  Avg 
5 
 Medicare  Utilization:  In  both  rural  and  urban  areas,  the  average  Medicare  utilization 
among  hospitals  that  closed  was  lower  on  average  than  the  national  averages.2 
MEDICARE  UTILIZA-I-ION 
70%  -
60%  -
60%  -
40%  -
30%  -
20%  -
10%  -
O%
RURAL  HOSPITALS  URBAN  HOSPITALS 
m  National  Avg  B  Clorred  Hospital  Avg 
Medicaid  Utilization:  Generally  the  average  Medicaid  utilization  among  rural 

hospitals  that  closed  was  lower  than  the  national  average.  There  was  one  exception, 

however.  One  of  the  10 rural  hospitals  that  closed  had  an  85 percent  Medicaid 

utilization  in  the  year  prior  to  closure.  That  hospital  re-opened  in  July  1997  after 

extensive  renovation.  Excluding  the  exception,  the  chart  below  compares  closed 

hospitals  to  the  national  averages.  The  average  Medicaid  utilization  for  the  other  nine 

rural  hospitals  that  closed  was  7.4 percent.  The  average  Medicaid  utilization  among 

urban  hospitals  that  closed  was  lower  than  the  national  average. 

MEDICAID  UTILIZATION 

20% 
18% 
16% 
14% 
12% 
10% 
8% 
6% 
4% 
2% 
0% 
RURAL  HOSPITALS  URBAN  HOSPITALS 
m  National  Avg  =  Closed  Hospital  Avo 
6 
 REASONS  FOR  HOSPITAL  CLOSURE 
As  in  our  previous  hospital  closure  studies,  the  many  health  care  professionals 
interviewed  reported  no  single  reason  for  hospital  closure.  Hospitals  closed  because 
of  the  interrelated  factors  of  declining  occupancy,  lagging  revenues,  and  rising  costs. 
Hospital  viability  was  said  to  depend  on  the  stability  of  all three  factors.  The 
weakening  of  any  one  may  begin  a chain  reaction  eventually  leading  to  hospital 
closure. 
Declining 
Rising 
costs 
L 	
Declining 
Revenues 
Although  the  sequence  and  combination  of  these  factors  were  not  always  the  same, 

generally  the  scenario  was  as  follows: 

The  hospitals  occupancy  begins  to  slide  because  a doctor  leaves  town  or  retires,  or 

begins  to  admit  patients  to  a more  modern  hospital  not  far  away.  Lengths  of  stay  are 

down  because  of  prospective  payment  pressures  and  more  effective  treatment 

methods.  A  new  ambulatory  surgical  center  has  opened  and  is also  drawing  patients 

away. 

While  occupancy  is declining,  the  hospitals  costs  continue  to  rise.  Competition  with 

other  hospitals  means  that  new,  high  technology  equipment  is needed.  Nurses  and 

technicians  are  demanding  higher  salaries  - and  they  are  getting  them  from  other 

hospitals  nearby.  The  building  may  be  deteriorating  but  the  hospital  has  not  been 

able  to  fully  fund  its  capital  reserves  for  several  years. 

7 
 On  the  other  hand,  patient  care  revenue  is down  because  of  lower  occupancy  and 
more  uninsured  or  inadequately  insured  patients.  For  those  who  do  have  coverage, 
either  public  or  private,  insurers  are  holding  down  their  costs  and  further  eroding  the 
hospitals  dwindling  resources. 
Soon  the  hospital  administrator  is unable  to  manage  the  situation,  and  the  Board 
examines  its  options:  continue  to  go  deeper  into  debt;  sell  the  hospital;  merge  with 
another;  or  close. 
The  smaller  the  hospital,  the  less  able  it is to  resist  this  downward  spiral.  As  noted 
earlier,  the  average  size  of  the  37 hospitals  that  closed  in  1996  was  only  27 beds  for 
rural  hospitals  and  110 beds  for  urban  hospitals.  They  are  considerably  smaller  than 
the  national  averages. 
IMPACT  OF HOSPITAL  CLOSURE 
In  communities  where  hospitals  closed  in  1996,  we  determined  the 
b  number  of  patients  affected  by  closure  of  hospitals, 
b  availability  of  inpatient  care  and  emergency  medical  services,  and 
current  use  of  closed  hospital  facilities. 
b 
How Many Patients Were Afected 
For  rural  hospitals  that  closed  in  1996,  the  average  daily  census  in  the  year  prior  to 
closure  was  about  5 patients.  The  urban  hospitals  that  closed  had  an  average  daily 
census  of  about  38 patients. 
WHEN  HOSPITALS  CLOSED, 

HOW  MANY  PATIENTS  WEB  AFFEiCIFD? 

Rural  Hospitals  Urban  Hospitals 
Average  Number  of  Beds  27.4  109.7 
Average  Occupancy  Rate  x 16.9%  x 34.2% 
Average  Number  of  Patients  4.6  37.5 
We  analyzed  Medicare  utilization  data  to  determine  the  number  of  elderly  patients 

affected  by  hospital  closure  in  1996.  In  rural  hospitals  that  closed,  about  two 

Medicare  patients  were  in  the  hospital  on  an  average  day  in  the  year  prior  to  closure. 

In  the  urban  hospitals  that  closed,  about  18 Medicare  patients  were  in  the  hospital  on 

an  average  day. 

8 
 WHEN  HOSPITALS  CLOSED, 
HOW  MANY  MEDICARE  PATIENTS  WEXE  AJ?l?Em? 
Rural  Hospitals  Urban  Hospitals 
Average  Patient  Census  4.6  37.5 
Average  Medicare  Utilization  Rate  x 49.2%  x 46.7% 
Average  Number  Medicare  Patients  2.3  17.5 
Are Inpatient  Care And  Emergency Services Available 
We  assessed  availability  of  inpatient  and  emergency  medical  care  in  miles  from  a 
closed  hospital  to  the  nearest  inpatient  and  emergency  facilities. 
Inpatient  Care:  In  most  communities  where  a hospital  closed  in  1996,  inpatient 
hospital  care  was  available  nearby. 
NUMBER  OF  CLOSED 
HOSPITALS 
DISTANCE  Rural  Urban 
Within  3 Miles  0  18 (67%) 
4-10  Miles  1  3 (30%) 1  8 (29%)
I  I 
1l-20  Miles  1 (10%)  0 
21-30  Miles  2 (20%)  1(4%) 
More  than  30 Miles  1 4 (40%)  1  0 
Totals  10 (100%)  27  (100%) 
Rural Areas:  Residents  in  6 of  the  10 rural  communities  (60  percent)  where  a hospital 
closed  could  get  inpatient  hospital  care  within  30 miles  of  the  closed  hospital. 
Residents  of  White  Sulphur  Springs,  Montana  and  Big  Sandy,  Montana  had  to  travel 
42  and  35 miles  respectively  for fuZZservice inpatient  hospital  care.  However,  these 
frontier  communities  converted  their  closed  hospitals  into  Medical  Assistance  Facilities 
(MAF).  These  MAF  facilities  provide  up  to  four  days  of  limited  inpatient  services. 
9 
 The  remaining  2 rural  communities  where  residents  had  to  travel  more  than  30 miles 
for  inpatient  care  are: 
Ozona,  Texas  34 miles 
Monument  Valley,  Utah  90 miles 
Urban Areas:  In  26  of  the  27 urban  communities  (96%)  where  a hospital  closed  in 
1996,  residents  could  get  inpatient  hospital  care  within  10 miles  of  the  closed  hospital. 
Fifteen  of  the  27 urban  communities  (55  percent)  where  a hospital  closed  could  get 
inpatient  care  in  the  same  community. 
Emergency  Services:  When  a hospital  closed,  the  community  lost  not  only  inpatient 
beds,  but  also  24-hour  emergency  services. 
Rural Areas:  In  8 of  the  10 rural  communities  (80  percent)  where  a hospital  closed  in 
1996,  emergency  care  facilities  were  available  within  20 miles  of  the  closed  hospital. 
Residents  of  Monument  Valley,  Utah  had  to  travel  23 miles  for  24-hour  emergency 
care  and  residents  of  Spring  Valley,  Minnesota  had  to  travel  27 miles  for  24-hour 
emergency  care. 
Urban Areas:  In  all  27 urban  communities  where  a hospital  closed  in  1996,  emergency 
care  facilities  were  available  within  10 miles  of  the  closed  hospital.  Seventeen  of  the 
27 urban  communities  (63  percent)  where  a hospital  closed  could  get  emergency 
services  in  the  same  town. 
NUMBER  OF  CLOSED 
HOSPITALS 
II 
DISTANCE  I  Rural  I  Urban  II 
II 
Within  3 Miles  I  4 (40%)  1  21  (7mq  11 
II 
4-10  Miles  I  3 (30%)  1  6 (22%)  11 
II  I  1W%> I  0  II 
1l-20  Miles 
21-30  Miles  2 (20%)  0 
More  than  30 Miles  0  0 
II 
Totals  1  10 (100%)  1  27  (100%)  11 
10 
 What Is the Building Used For Now 
At  the  time  of  our  inspection,  27 of  the  37 closed  hospital  facilities  were  being  used  -- 
23  of  them  (62  percent)  for  health-related  services.  For  example: 
Monument  Valley  Hospital  in  Monument  Valley,  Utah  and  Crockett  County 
Hospital  in  Ozona,  Texas  became  rural  health  clinics. 
Bess  Kaiser  Medical  Center  in  Portland,  Oregon  and  St.  Marys  Hospital  in 
Galveston,  Texas  became  day  surgery  and  outpatient  clinics. 
Community  Memorial  Hospital  in  Spring  Valley,  Minnesota  and  Bruce  Hospital 
in  Bruce,  Mississippi  are  now  nursing  homes. 
Decatur  Hospital  in  Decatur,  Georgia  was  converted  to  a long-term  acute  care 
hospital. 
Doctors  Hospital  of  Santa  Ana  in  Santa  Ana,  California  and  Buena  Park 
Medical  Center  in  Buena  Park,  California  became  specialty  hospitals. 
Enid  Regional  Hospital  in  Enid,  Oklahoma  is now  a home  health  agency  and 
rehabilitation  center. 
Genesys  Regional  Medical  Center  - Wheelock  Campus  in  Goodrich,  Michigan 
now  provides  hospice  services. 
Mountainview  Medical  Center  in  White  Sulphur  Springs,  Montana  and  Big 
Sandy  Medical  Center  in  Big  Sandy,  Montana  were  converted  to  a HCFA 
sponsored  Medical  Assistance  Facility.  In  addition  to  providing  limited 
inpatient  care,  it provides  24-hour  emergency  services  and  outpatient  care. 
(The  Office  of  Inspector  General  released  a report  on  Medical Assistance 
Facilities (OEI-04-92-00731)  in  July  1993.) 
At  the  time  of  our  review,  community  officials  were  planning  to  use  6 of  the  10 

remaining  vacant  hospitals  for  health-related  services.  For  example,  Lamar 

Community  Hospital  in  Vernon,  Alabama  will  be  converted  to  an  assisted  living  facility 

and  Winsted  Memorial  Hospital  in  Winsted,  Connecticut  will  become  a day  surgery 

and  outpatient  clinic. 

11 
 ENDNOTES 

1. 	 Hospital  occupancy  rate  is defined  as  the  actual  number  of  patient  days  divided 
by  the  total  bed  days  available.  National  average  occupancy  rate  is defined  as 
the  sum  of  all  hospitals  occupancy  rates,  divided  by  the  number  of  hospitals. 
2. 	 Average  Medicare  utilization  of  closed  rural  and  urban  hospitals  is defined  as 
the  percent  of  Medicare  patient  days  compared  to  the  total  patient  days  for 
each  hospital,  summed  and  divided  by  the  number  of  hospitals.  National 
average  Medicare  utilization  is the  percent  of  Medicare  utilization  of  each 
hospital,  summed  and  divided  by  the  total  number  of  hospitals. 
3.  Medicaid  utilization  is calculated  in  the  same  way  as Medicare  utilization. 
12 
 APPENDIX  A 
METHODOLOGY 
Extent of Hospital  Closure 
To  determine  how  many  hospitals  closed  in  1996,  we  surveyed  State  licensing  and 

certification  agencies,  State  hospital  associations,  and  State  health  planning  agencies. 

We  also  compiled  Health  Care  Financing  Administration  (HCFA)  data  on  terminated 

providers  in  1996.  When  a closed  hospital  met  the  studys  definition  or  when  there 

were  questions,  we  contacted  officials  associated  with  the  closed  hospitals,  officials 

associated  with  hospitals  nearest  to  the  closed  hospital,  and  local  public  officials. 

To  determine  the  number  of  hospitals  in  the  United  States,  we  used  the  Hospital  Cost 

Report  Information  System  (HCRIS)  maintained  by  HCFA.  We  included  only 

general,  short-term,  acute  care  hospitals  under  Medicares  Prospective  Payment 

System  (PPS)  in  the  universe.  There  were  4,955  hospitals  listed  on  HCRIS  as  short-

term,  acute  care,  general  hospitals  for  the  twelfth  year  of  PPS  (PPS  12). 

Character&x  of Hospitul  Closure 
To  analyze  characteristics  of  closed  hospitals,  we  used  HCRIS  data.  Cost  reports  were 
not  available  for  3 of  the  37 hospitals.  For  the  remaining  34 hospitals,  we  used  the 
latest  pre-closure  cost  reports.  For  example,  if a hospital  closed  in  May  1996  and  its 
accounting  year  was  on  a January-December  cycle,  we  used  the  providers  January  1, 
1995  to  December  31,  1995  report. 
Reasons for and Impact  of Hospital  Closure 
We  limited  our  impact  analysis  to  the  distance  from  a closed  hospital  to  the  nearest 
still-operating  hospitals  and  to  emergency  services.  In  addition  to  the  HCRIS,  we 
obtained  data  for  our  analysis  from  interviews  with  the  following  sources. 
Former  hospital  administrators,  board  members,  and/or  staff  of  closed  hospitals 
b 
b  Hospital  administrators  and/or  staff  at  the  nearest  hospitals 
Local  police,  health,  and  government  officials 
b 
State  health  planning  agencies 
b 
State  certification  and  licensing  agencies 
b 
State  hospital  associations 
b 
A -1 
 APPENDIX  B 
,,,,............ A........ii.i)...._. :.. .. .: ..::..i.:.:....::.:.. .:::...:::...:::...:::...:::...:::...:::...:::...:::...:::...:::...:::...:::...:::...:::...:::...:,:.. ::. :.:.:.:.:...~ .. :...,,:..:,,:..:,,~....(,(,~....,,,~(....,,.~.....,,,~,....,,.~... .,,~_..,,.~_..,,.._~..,...\.~..._,....~: ,.~...~~, ..~~.,,..~.,,,..~.,,,..~.,,.,,..~.,_,,,...~..,,,_,...~.,,,.,...,~.,,,.,..,~., ..,~,..,,..:.,~ ., , ~~~~~~~:~~~~~~~~~~,:~((~, :: :,:,:; .:.:(.:.:.~..:.:.:.:.~.~.~.~.~.~.~.~.~.:.~.  :.:,:,~:.::::~:..:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.~~:.~:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:~:.~~:.~~~~~~~~~~~~~~~~~~~~.~~~~~~~~,.,.,.,.  ,...,.. ,.... ........................................................ 
::,:~.::,.~:.::,.~::.,: ~:.:~~~~.~:.~:: ~:...:~:~.: .j.~:.:~:. ..:~~:.: .~.:.::,.: .~::.::~.: :.~:~.:::. ::.::.::.:. :: .::.:: .:.~:: :: ::~:: :~~:::~~.:::..:~-:::..:,:.:A. .::.:~..::.:.-.:: :.~ :..:...:.. :...:..:...:..:..,:..,:.., :..,:...:...: .:..:.,,.....: .....:..  ..:... :.._.; .L.. . :... ..... ....... ...... ....... ...... ...... ....... . ... .... ... ......I . ....  :.. ..  . :...> :.  :...-:...:...:...... .... ..:... (..:..... :.....(..: ,..:. :.. . ..: ... :......: ..::.... ..:.... :......: ...:.... ..: ...: ..: ..: ... :... ..: .... :... ...:  ...:.... ..:....: ......: ...:.... ;......: ...:... ...~... :......: ...:... ...~... ...:.... ..:.... :......: ...:.... ..:...:.....:...:....::...::....:: ..:....(..:....,.:..\.. .:....:...,.:....:.....:...,:...,.:....:...._ .:.....: ......:_. ..:_..., :.....,:. .:..~.... .:..... .:......:. .....:.. ...:.. ... ...... ....... ...... ...... ....... ...... ....,. ..... . ... .... .... ... .... .~........ ,.:~ .:,.,, ~,,.: ,,,.:,  ,,., ...,,.... ,...,...., ,...,....,  .:,.,..: ,..,:.., .,.:,..., :.,.,..: ,..,:.., .,.:,...,:.,...: ..:... .: .. :....: ..:... .: ...:.....:..:...:..:...:..:...:,.~..,~..,.~.,.~.,.~...~....~...~. ........,.,,.,. . ._:;,.,.:,~..:,.~,:,.,:,, .,~ ...~.......~.....~.....~.....~.......~.....~.....~.....~.. ....~......~ .....~ ..... ~.....~.......~.....~.....~.....~.......~.....~.....~..~..~....~...~...,.:~. ,,~,.~,.m.,....~..  .. .....................~...~... .....~.:.,.::. _),:::..:~::.:.::)::~:::::..:::~.:::::..::,:::..::,:::..::,:::..::,:::..::,:::..::,:::..::,~: .:,.:.~:,..,~.,..~,..,~.,..~,..,~.,..~,..,~.,..~,..,~.,.~~,.~~~.:~.~,:~.:: . ::.,:: ,:,:,
State  Total  Closures  Rural  Closures  Urban  Closures 
California 
Florida 
Texas 
Michigan 
Montana 
New  York 
Alabama 
Connecticut 
Delaware 
Georgia 
Illinois 
Louisiana 
Massachusetts 
Minnesota 
Mississippi 
North  Dakota 
Ohio 
Oklahoma 
Oregon 
South  Dakota 
Utah 
Wisconsin 
22 States  37 Closures  10 Rural  27 Urban 
B-l  APPENDIX  C 
.!iii:::::::::::::::::::::::.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:. 
~~~~ 
:::::::::::::::::::::.:.:.~:.:.~  ..,.(.(..... 
Rural/ 
Hospital  Name  City  State  Urban 
Lamar  Community  Hospital  Vernon  AL  rural 
Sierra  Community  Hospital  Fresno  CA  urban 
Doctors  Hospital  of  Santa  Ana  Santa  Ana  CA  urban 
Buena  Park  Medical  Center  Buena  Park  CA  urban 
Visalia  Community  Hospital  Visalia  CA  urban 
Tustin  Hospital  Tustin  CA  urban 
Desert  Palms  Community  Hospital  Palmdale  CA  urban 
Lakeside  Hospital  Perris  CA  rural 
Winsted  Memorial  Hospital  Winsted  CT  urban 
Riverside  Hospital  Wilmington  DE  urban 
Seminole  Hospital  and  Womens  Center  Seminole  FL  urban 
Pinellas  Community  Hospital  Pinellas  Park  FL  urban 
Palm  Beach  Hospital  Lake  Worth  FL  urban 
Riverside  Hospital  Jacksonville  FL  urban 
Decatur  Hospital  Decatur  GA  urban 
Saint  Cabrini  Hospital  Chicago  IL  urban 
Elmwood  Medical  Center  Jefferson  LA  urban 
Providence  Hospital  Holyoke  MA  urban 
Yale  Community  Hospital  Yale  MI  urban 
Genesys  Regional  Med  Ctr-Wheelock  Campus  Goodrich  MI  urban 
Community  Memorial  Hospital  Spring  Valley  MN  rural 
Bruce  Hospital  Bruce  MS  rural 
Mountainview  Memorial  Hospital  White  Sulphur  Springs  MT  rural 
Big  Sandy  Medical  Center  Big  Sandy  MT  rural 
Heartland  Medical  Center  Fargo  ND  urban 
Little  Neck  Community  Hospital  Little  Neck  NY  urban 
Wyckoff  Heights  Med  Ctr-Jackson  Heights  Queens  NY  urban 
St.  Joseph  Riverside  Hospital  Warren  OH  urban 
Enid  Regional  Hospital  Enid  OK  urban 
Bess  Kaiser  Medical  Center  Portland  OR  urban 
Belle  Fourche  Health  Care  Center  Belle  Fourche  SD  rural 
Crockett  County  Hospital  and  Care  Center  Ozona  TX  rural 
Garza  Memorial  Hospital  Post  TX  rural 
St.  Marys  Hospital  Galveston  TX  urban 
Physicians  Regional  Hospital  Wylie  TX  urban 
Monument  Valley  Hospital  Monument  UT  rural 
Kaukauna  Community  Hospital  Kaukauna  WI  urban 
C-l