Department of  Health and Human Services 
OFFICE OF 

INSPECTOR  GENERAL 

HOSPITAL CLOSURE: 1992 
 OF'FICE OF  GENERAL 
The mission of the Office of Inspector General (OIG), as mandated by Public Law  as 
amended, 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 thoseprogram.  This 
statutory mission is  out through a nationwide network of audits, investigations, and 
inspections conducted by three OIG operating components: the Office of Audit Services, the 
of Investigations, and the Officeof Evaluation and Inspections.  The OIG also informs 
the Secretary of HHS of program and management problems and recommends  to 
correct them. 
OF  SERVICES  . 
The  Office of Audit  provides all auditing  for HHS, either by 
conducting audits with its own audit resourcesor by  audit work done by others. 
Audits examine the performance of  programs and/or its grantees and contractors in 
carrying out their respective responsibilities and are intended to provide independent 
of HHS programs and operations in order to reduce waste, abuse, and 
mismanagement and to promote economy and efficiency throughout the Department. 
OF INVESTIGATIONS 
The  Office of Investigations  conducts criminal, civil, and administrative 
investigations of allegations of wrongdoing in  program or to HHS beneficiaries and of 
unjust enrichment by providers.  The investigative effortsof  lead to criminal convictions, 
administrative sanctions, or  money penalties.  The  also Oversees State Medicaid fraud 
control units which investigate and prosecute fraud and patient abuse in the Medicaid program. 
OFFICE OF EVALUATION  INSPECTIONS 
The  Office of Evaluation and Inspections (OEI)conducts short-term management and 
program evaluations (called inspections) that focus on issuesof concern to the Department, 
the Congress, and the public.  The findings and recommendations contained in these inspection 
reports generate rapid, accurate, and up-to-date information on the efficiency, vulnerability, 
and effectiveness of departmental programs. 
Atlanta Regional Office prepared this report under the direction of Jesse J. Flowers, 
Regional Inspector General and Christopher  Deputy Regional Inspector General. 
Principal OEIstaff included: 
ATLANTA  HEADQUARTERS 
Ron  Cathaleen 
Maureen  Jennifer Antico 
Ruth  Linda 
Paula 
For additional copies of this report, please call the Atlanta Regional Office  at (404)-3314108.  E X E C U T I V E   S U M M A R Y  

PURPOSE 

To describe the extent, characteristics and impact of hospital closure in 1992. 
BACKGROUND 
The closure of hospitals in recent years has generated public and congressional concern. 
According to a number of studies, more hospitals are expected to close in  years. 
-
Questions have been raised about the phenomenon of hospital closure, as well as the 
implications for public policy. 
We released a report in May 1989 describing the nationwide phenomenon of hospital 
closure in 1987.  We continued analysis of hospital closure to determine trends and 
effects of the phenomenon.  We issued subsequent reports on hospital closure in 1988, 
1989, 1990 and 1991. 
The findings from the previous OIG annual studies 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.  -
FINDINGS 

Our inspection of hospital closure in 1992 produced findings similar to those previously 
reported for 1987-1991. 
Fifty general, acute care hospitals closed, continuing a downward trend in the 
annual number of closures.  They were located in 24 States.  Seven new general, 
acute care hospitals opened in 1992. 
Twenty-six of the closed hospitals were rural and 24 were urban. 
Closed hospitals in both rural and urban areas were much smaller than the 
national averages. 
Rural hospitals that closed had an average size of 33 beds compared to an 
average of 77 beds for all rural hospitals nationally. 
. .  
Urban hospitals that closed had an average size of 87 beds compared to an 
average of 236 beds for all urban hospitals nationally.  Occupancy rates for closed rural and urban hospitals were lower than the national 
averages. 
Rural hospitals that closed had an average occupancy rate of 26 percent 
compared to an average of 36 percent for all rural hospitals nationally. 
Urban hospitals that closed had an average occupancy rate of 30 percent 
compared to an average of  percent for all urban hospitals nationally. 
For rural hospitals that closed, the average daily census in the year prior to 
closure was nine patients.  The urban hospitals that closed had an average daily 
census of 26 patients. 
Medicare utilization among urban hospitals that closed differed slightly from 
national averages. 
In urban areas, the average Medicare utilization among hospitals that 
closed was slightly higher than the urban national average (49.4 percent vs. 
46.7 percent). 
In rural areas, no significant differences existed in the average Medicare 
utilization among hospitals that closed and all rural hospitals nationally. 
Medicaid utilization among rural and urban hospitals that closed also differed 
slightly from national averages. 
In urban areas, the average Medicaid utilization among hospitals that 
closed was slightly higher than the urban national average (13.9 percent vs. 
12.8 percent). 
In rural areas, the average Medicaid utilization among hospitals that closed 
was lower than the rural national average (9.3 percent vs.  13 percent). 
Although residents in a few communities had to travel greater distances for 
hospital care, most had emergency and inpatient medical care available within 20 
miles of a closed hospital. 
At the time of our inspection, 27 of the 50 closed hospital facilities (54 percent) 
were being used for health-related services.  Also, plans were being made for 
using 8 of the remaining 23 vacant hospitals for health-related services.  TABLE O F   CONTENTS 

............................................ 
i 

................................................... 
FJNDINGS 

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

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

......................................... 
Where Were They  3 

...................................... 
What Were They Like 
4 
....................................... 
of Hospital Closure  7 
............................ 
How Many Patients Were Affected  7 

Are Inpatient Care and Emergency

........................................ 	
Services Available 
........................... 
What Is the Building Used For Now  9

...................................................... 
11 
............................................... 
Methodology 
............................. 
Number of Hospital Closures by State 
.................... 
Hospital Closures by Hospital Name and Location  I N T R O D U C T I O N  

PURPOSE 

To describe the extent, characteristics and impact of hospital closure in 1992. 
In the past several years, the closure of general, acute care hospitals has generated public 
and congressional concern.  According to a number of studies, more hospitals are 
expected to close in coming years.  Questions have been raised about the phenomenon of 
hospital closure in the United States, as well as implications for public policy. 
We released a report  May 1989 describing the extent, characteristics and impact of 
hospital closure in the United States in 1987.  That inspection showed that 69 hospitals 
closed in 1987.  Following that inspection, many health policy officials in both the 
executive and legislative branches of the Federal government encouraged us to continue 
analysis of the phenomenon.  They expressed interest in detecting differences in the 
(1) rate of hospital closure, (2) characteristics of hospitals that close, and (3) impact of 
their closing. 
Similar inspections of the phenomenon of hospital closure in 1988 through 1991 showed 
a downward trend in the number of closures. 
HOSPITAL  C L O S U R E  
-
40 
20 
" 
1991 
1990 
Y E A R   The findings from the 1987, 1988, 1989, 1990 and 1991 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. 
We examined hospitals that closed in calendar year 1992. 
For purposes of this study, the following definitions were used. 
Hospital:  A facility that provides general, short-term, acute medical and surgical 
inpatient 
Closed Hospital:  One that stopped providing general, short-term, acute inpatient 
services in 1992.  If a hospital merged with or was sold to another hospital and the 
physical plant closed for inpatient acute care, it was considered a closure.  If a hospital 
both closed and reopened in 1992, it was not considered a closure. 
To determine the extent 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 
1992from the Hospital Cost Report Information System (HCRIS) maintained by HCFA. 
Appendix A describes our methodology in further detail.  F I N D I N G S  

The Inspector General's study of hospitals closed in 1992 showed that: 
Fifty general, acute care hospitals closed in 1992, continuing a downward trend in 
the annual number of closures. 
Most hospitals that closed were small and had low occupancy rates. 
When a hospital closed, few patients were affected. 
Although residents of a few communities had to travel greater distances for 
hospital care, most had emergency and inpatient medical care available within 20 
miles of the closed hospital. 
EXTENT OF 
How Many 
In  there were 5,243 general, short-term, acute care hospitals in the United States 
entered on  data base as participating in the Medicare program.  Fifty hospitals 
--
closed in 1992  about 1 percent of all hospitals nationally.  Seven fewer hospitals closed 
in  than in the previous year. 
IN  U.S.:  5,243 
CLOSED IN  50 
When they closed, the general, acute care inpatient bed supply was reduced by 2,934 
beds, or 0.3 percent. 
The closed hospitals were located in 24 States.  Florida had the greatest number of 
closures  followed by California  Mississippi  Texas  Pennsylvania (3) and 
Tennessee (3).  Nine States had two closures each and the remaining nine States had one 
closure each.  Appendix B lists the number of hospital closures by State.  Appendix C 
lists the closures by hospital name and location.  Nationally, a higher percentage of rural hospitals (1.1 percent) closed in 1992 than did 
urban hospitals (0.8 percent). 
RURAL  URBAN 
IN THE US.:  2,895 
IN  24 (0.8%) 
While 50 hospitals closed in 1992, 7 new general, acute care hospitals  , adding 266 
~ 
beds to the national supply of beds. 
Were  Hospitals 
-
Hospitals that closed in 1992 were small.  More than half the hospitals that closed 
percent) had fewer than 50 beds. 
Number of Closed Hospitals 
Number of Beds  Rural  Urban  Total  Percent 
-
0  29  16  4  20  40 
-
30  49  6  4  10  20 
-
50  99  4  5  9  18 
100- 199  0  11  11  22 
I  I  I 
200-299  0  0  0 0 
~~ 
300  0  0  0 
 0 

26 
 24 
 50  100  Both the rural and urban hospitals that closed in 1992 were considerably smaller than the 
average size of rural and urban general, acute care hospitals nationally. 
HOSPITALS THAT  CLOSED 
WERE  SMALL 
or 
. 
000-
-
100 -

160 
-
60 -
RURAL HOSPITALS 
. 
Occupancy rates for closed rural and urban hospitals were lower than the 
national 
OCCUPANCY  RATES WERE  LOW 
-

-
-
-
-
-
-

RURAL HOSPITALS  URBAN HOSPITALS 
AVO  Medicare Utilization:  In urban areas, the average Medicare utilization among hospitals 
that closed was slightly higher than the urban national average (49.4 percent vs. 46.7 
percent).  No significant differences existed in the average Medicare utilization among 
rural hospitals that closed and all rural hospitals nationally? 
MEDICARE  UTILIZATION 
-
60U 
-
-
-
-
-

RURAL  HOSPITAL8 
A- Avo 
Medicaid Utilization:  In rural areas, the average Medicaid utilization among hospitals 
that closed was lower than the rural national average (9.3percent vs. 13 percent).  In 
urban areas, the average Medicaid utilization among hospitals that closed was slightly 
higher than the urban national average (13.9 percent  12.8 percent)? 
MEDICAID UTILIZATION 
* 
1
-
RURAL HOSPITALS  UREAN HOSPITALS 
Avo  OF 
In communities where hospitals closed in 1992, we assessed the 
number of patients affected by closure of hospitals, 
availability of inpatient care and emergency medical services, and 
current use of the closed hospital facility. 
How Many  WereAffected 
For rural hospitals that closed in  the average daily census in the year  to 
closure was nine patients.  The urban hospitals that closed had an average daily census of 
26 patients. 
I 
WHEN  CLOSED, 
HOW MANY  WERE
~~  ~  ~ 
Rural Hospitals  Urban Hospitals 
Average Number of Beds  32.6  86.9 
Average Occupancy Rate  x 26.3%  x 29.6% 
Average Number of Patients  8.6  25.7 
We analyzed Medicare utilization data to determine the number of elderly patients 
affected by hospital closure in  In rural hospitals that closed, five Medicare patients 
were in the hospital on an average day in the year prior to closure.  In the urban 
hospitals that closed, there were 13 Medicare patients on an average day. 
WHEN 
HOW MEDICARE PATIENTS WERE
Rural Hospitals  Urban Hospitals 
Average Patient Census  8.6  25.7 
Average Medicare  Rate  x 52.6%  x 49.4% 
Average Number Medicare Patients  4.5  12.7  I .  and  Services
We assessed availability of inpatient and emergency medical care in miles from the 
closed hospitals to the nearest inpatient and emergency facilities. 
 :- In most communities where a hospital closed in 1992, inpatient hospital 
care was available nearby. 
Rural Areas:  Residents in 16 of the 26 rural communities (62 percent) where a hospital 
closed could get inpatient hospital care within 20 miles of the closed hospital. 
Residents of 3 rural communities had to travel more than 30 miles for inpatient hospital 
care: 
Arizona  32 miles 
Big Timber, Montana  35 miles 
Culbertson, Montana  38 miles 
The frontier community of Culbertson, Montana converted its closed hospital into a 
Medical Assistance Facility (MAF).  The MAF facility provides up to four days of limited 
inpatient services.  The community of Big Timber, Montana is planning to do the same. 
Urban Areas:  In  but 3 of the 24 urban communities where a hospital closed in 1992, 
residents could get inpatient hospital care within 10 miles of the closed hospital. 
Residents of one community who lost their hospital must travel over 20 miles for 
inpatient care.  For  Washington the nearest hospital is now located 25 miles 
away in 
~ 
OF CLOSED 
HOSPITALS 
DISTANCE  Rural  Urban 
Within 3 Miles  2 (8%)  13 (54%) 
11-20 Miles  10 (38%)  2 (9%) 
21-30 Miles  7 
More than 30 Miles  3 (12%) Services: When a hospital closed, the community lost not only inpatient beds, 
but also emergency 
For residents in 21 of 26 rural communities (81 percent) where hospitals 
closed in  emergency care facilities were available within 20 miles of the closed 
hospitals.  Residents of one community must travel more than 30 miles for 24-hour 
emergency care.  In Holbrook, Arizona the nearest emergency care is located 32 miles 
away in  However, Holbrook has an outpatient clinic and a physician. 
Urban Areas:  In 22 of 24 urban communities (92 percent) where a hospital closed in 
emergency care facilities were within 10 miles from the closed hospital. 
remaining 2 communities are within 15 miles of an emergency care facility. 
NEAREST  SERVICES TO CLOSED HOSPITALS 
NUMBER OF CLOSED 
HOSPITALS 
DISTANCE  Rural  Urban 
Within 3 Miles  9 (35%)  16 (67%) 
4-10 Miles  3 (11%)  6 (25%) 
11-20 Miles  9  2 
21-30 Miles 
More than 30 Miles  0 (0%) 
Totals  26 (100%)  24 (100%) 
What  the Building UsedFor Now 
At the time of our review, 27 of the 50 closed hospital buildings (54 percent) were being 
used for health-related services.  For example: 
Pierce County Hospital in Blackshear, Georgia and Community Memorial 
Hospital in Hartley, Iowa became nursing homes. 
North Gables Hospital in Coral Gables, Florida and  Hospital in Kansas 
City, Missouri are now long term care hospitals. 
Deering Hospital in Miami, Florida closed due to damage as a result of 
Andrew.  The hospital was rebuilt and re-opened in April, 1993.  Hospital in Lebanon, Tennessee is now  Specialty Hospital. 
It was converted to an alcohol and drug rehabilitation facility. 
The hospital in Culbertson Montana was converted to a 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  Facilities (OEI-04-92-00731) in July, 1993. 
The following chart illustrates the use of all 50 hospital facilities after closure in 1992. 
USE OF 
~ 
NUMBER OF FORMER HOSPITALS' 
USE OF BUILDING  Rural  Urban 
Specialty Treatment Facility 
chemical dependency)  2  4 
Reopened Hospital  1  1 
Long  Care Facility  2  2 
Outpatient  8  9 
Offices  1  1 
*Duplicate count.  In 4 of the 50 former hospitals more than 1 service is now offered. 
At the time of our review, plans were being made to use 8 of the remaining 23 vacant 
hospitals for health-related services.  For example, Umpqua Valley  Hospital
in Myrtle Creek, Oregon will be converted to a home for the elderly.  North 
hospital in  Louisianawill be converted to an adolescent psychiatric facility. 
Also, plans were being made for five of the closed facilities to reopen as acute care 
hospitals.  ENDNOTES 

1. 	 Hospital occupancy rate is defined as the actual number of patient days divided by 
the total bed days available.  National occupancy rate is defined as the sum of all 
hospitals occupancy rates, divided by the number of hospitals. 
2. 	 Average Medicare utilization  closed rural and  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.  APPENDIX  A 

To determine how many hospitals closed in 1992, 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 1992.  When a closed hospital met the study's 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 Medicare's Prospective Payment System (PPS) in 
the universe.  There were 5,243 hospitals listed on HCRIS as short-term, acute care, 
general hospitals for the eighth year of PPS (PPS 8). 
of
To analyze characteristics of closed hospitals, we used  HCRIS data.  Cost 
reports were not available for 1of the 50 closed hospitals because they reported to 
Medicare as part of a corporate system, rather than as an individual hospital in the year 
prior to closure.  For the remaining 49 hospitals, we used the latest pre-closure cost 
reports.  For example, if a hospital closed in May 1992 and its accounting year was on a 
January-December cycle, we used the provider's January 1, 1991 to December 31, 1991 
report. 
of
We limited our "impact" analysis to the distance from a closed hospital to the nearest 
still-operating hospitals and to emergency services.  We obtained data for our analysis 
from interviews with the following sources 
Former hospital administrators, board members, and/or staff of closed hospitals 
Hospital administrators and/or staff at the nearest hospitals 
Local police and health officials 
Local government officials 
State health planning agencies 
State certification and licensing agencies 
State hospital associations  APPENDIX  B 
 A P P E N D I X   C 

CLOSURESBY NAME 
~  I  I 
Hospital Name  State
Abernethy Memorial Hospital  AL  rural 
Bull Shoals Community Hospital  Bull Shoals  AR  rural 
Huntsville Memorial Hospital  Huntsville  rural 
Community General Hospital  Holbrook  rural 
Rivera Community Hospital  Rivera  CA  urban 
Avenal District Hospital  Avenal  CA  rural 
Medical Center of La Mirada  La Mirada  CA  urban 
Hospital of Orange County  CA  urban 
Clay Memorial Hospital  Green Cove Springs  urban 
North Gables Hospital  Coral Gables  FL  urban 
Hardee Memorial Hospital  Wauchula  FL  rural 
Deering Hospital  Miami  urban 
University Hospital and Clinic  Pensacola  FL  urban 
Crest Medical Center, Rockmart-Aragon  GA  rural 
Pierce County Hospital  Blackshear  GA  rural 
Community Memorial Hospital  rural 
Forest City Community Hospital  Forest City  rural 
Spearville District Hospital  Spearville  Ks  rural 
John Primary Care Hospital  John  Ks  rural 
North Claiborne Hospital  LA  rural 
Doctors Hospital  Detroit  MI  urban 
Detroit Osteopathic Hospital  Highland Park  MI  urban 
Wells Hospital  Wells  MN  rural 
Hospital  Kansas City  MO  urban 
Madden Community Hospital  Madden  MS  rural 
Shelby Community Hospital  Shelby  MS  rural 
Smith County General Hospital  Raliegh  MS  rural 
Methodist Hospital of Stone County  MS  rural 
Roosevelt Memorial Hospital  Culbertson  rural 
Sweet Grass Community Hospital  Big Timber  rural 
Kennedy Memorial Hospital of  Brook  Saddle Brook  NJ  urban 
Columbia-Greene Medical Center  NY  rural 
Francis Hospital of Buffalo  Buffalo  NY  urban 
I  I  I I
HOSPITAL  BY NAME AND 
~  ~ 
Hospital Name  City  State  Urban 
Park Medical Center  Portland  OR  urban 
Valley Community Hospital  Myrtle Creek  OR  rural 
Medical College  Division  Philadelphia  PA  urban 
Carbondale General Hospital  Carbondale  PA  urban 
Westmoreland  Hospital  Ligonier  .  PA  urban 
Estelline Community Hospital  Estelline  SD  rural 
Hancock County Hospital  Sneedville  TN 
Lebanon  TN  urban 
Warren Regional Hospital TN  rural 
GulfCoast Hospital  urban 
-
Medical Center  Gladewater  Gladewater  urban 
Bridgeport Hospital  Bridgeport  rural 
Lake Cliff Hospital  Dallas  urban 
Jefferson Hospital  Alexandria  VA  urban 
Snoqualmie Valley Hospital  Snoqualmie  WA  urban 
Community Hospital  WA  urban 
Doctors Hospital  South Charleston  urban