Department of Health and Human Services 
OFFICE OF 
INSPECTOR GENERAL 
Trends in Rural Hospital Closure 
1990-2000 
JANET REHNQUIST 
Inspector General 
May 2003 
OEI 04-02-00610  O I G
FFICE OF  NSPECTOR  ENERAL

http://www.oig.hhs.gov/ 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as amended 
by Public Law 100-504, is to protect the integrity of the Department of Health and Human Services 
(HHS) programs, as well as the health and welfare of beneficiaries served by those programs.  This 
statutory mission is carried out through a nationwide network of audits, investigations, and inspections 
conducted by the following operating components: 
Office of Audit Services 
The OIG's Office of Audit Services (OAS) provides all auditing services for HHS, either by conducting 
audits with its own audit resources or by overseeing audit work done by others.  Audits examine the 
performance of HHS programs and/or its grantees and contractors in carrying out their respective 
responsibilities and are intended to provide independent assessments of HHS programs and operations in 
order to reduce waste, abuse, and mismanagement and to promote economy and efficiency throughout the 
Department. 
Office of Evaluation and Inspections 
The OIG's Office of Evaluation and Inspections (OEI) conducts short-term management and program 
evaluations (called inspections) that focus on issues of concern to the Department, the Congress, and the 
public.  The findings and recommendations contained in the inspection reports generate rapid, accurate, 
and up-to-date information on the efficiency, vulnerability, and effectiveness of departmental programs. 
Office of Investigations 
The OIG's Office of Investigations (OI) conducts criminal, civil, and administrative investigations of 
allegations of wrongdoing in HHS programs or to HHS beneficiaries and of unjust enrichment by 
providers.  The investigative efforts of OI lead to criminal convictions, administrative sanctions, or civil 
monetary penalties.  The OI also oversees State Medicaid fraud control units which investigate and 
prosecute fraud and patient abuse in the Medicaid program. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to OIG, rendering 
advice and opinions on HHS programs and operations and providing all legal support in OIGs internal 
operations.  The OCIG imposes program exclusions and civil monetary penalties on health care providers 
and litigates those actions within the Department.  The OCIG also represents OIG in the global settlement 
of cases arising under the Civil False Claims Act, develops and monitors corporate integrity agreements, 
develops model compliance plans, renders advisory opinions on OIG sanctions to the health care 
community, and issues fraud alerts and other industry guidance.     E X E C U T I V E   S U M M A R Y  
OBJECTIVE 
To summarize the extent, characteristics, reasons for, and impact of rural hospital closures from 
calendar years 1990 through 2000. 
BACKGROUND 
Hospital closures have generated concern among the health care industry, government leaders, 
and the general public. Of particular interest were the reasons for and impact of the closures. 
In May 1989, the Office of Inspector General (OIG) released a report describing the 
phenomenon of urban and rural hospital closures within the United States during calendar year 
1987.  Many users of that information encouraged us to continue a yearly analysis to determine 
the rate of closure as well as trends in the characteristics and circumstances of hospitals that 
closed. Consequently, we conducted similar annual inspections documenting hospitals that 
closed through calendar year 2000. 
In 1993, the OIG released a report describing trends associated with rural hospitals that closed 
from 1987 through 1991.  Our current inspection broadens that information and focuses on the 
extent and characteristics, as well as the reasons for and effects of rural hospitals that closed 
during 1990-2000. We are issuing a separate report documenting the unique circumstances 
that led to urban hospital closures, Trends in Urban Hospital Closure: 1990-2000" (OEI-04-
02-00611). 
To determine the extent, characteristics, reasons for, and impact of rural hospital closures 
during calendar year 1990-2000, we reviewed and expanded upon the information previously 
documented in our annual hospital closure reports.  For those reports, we compiled hospital 
data from two Centers for Medicare & Medicaid Services (CMS) databases: the Hospital 
Cost Report Information System (HCRIS) and Provider of Service (POS) file. Additionally, 
we interviewed officials associated with each of the closed hospitals as well as representatives 
from state hospital and licensing agencies. 
FINDINGS 
Our review of rural hospitals that closed from 1990 through 2000 revealed the following: 
208 rural hospitals closed -- 7.8 percent of all rural hospitals nationally at the 
beginning of the trend period. 
i 
Trends in Rural Hospital Closure: 1990-2000  OEI-04-02-00610    The average annual rate of closure was less than 1 percent. 
	 Rural bed supply was reduced by 3.7 percent (8,228 of the 220,028 rural beds 
nationally in 1990). 
Generally, rural hospitals that closed were smaller and treated fewer patients than 
rural hospitals nationally. 
	 Rural hospitals that closed averaged fewer beds, lower occupancy rates and annual net 
income, and slightly lower Medicare and Medicaid utilization rates compared to rural 
hospitals nationally. 
<  Size: 39.6 beds compared to 75.4 beds nationally 
<  Occupancy: 25.4 percent compared to 35.6 percent nationally 
<  Net income: $1,488 compared to $799,560 nationally 
<  Medicare utilization: 53.9 percent compared to 55.5 percent nationally 
<  Medicaid utilization: 11 percent compared to 12.1 percent nationally 
	 Rural hospitals that closed were used by about one-third as many patients as rural 
hospitals nationally. Specifically, their average daily census was: 
<  Total patients: 10 patients, compared to 27 patients nationally 
<  Medicare patients: 5 patients, compared to 15 patients nationally 
<  Medicaid patients: 1 patient, compared to 3 patients nationally 
Officials associated with most rural hospitals that closed reported the reasons to be 
business-related decisions or a low number of patients. 
	 From 1998 through 2000, 58 rural hospitals closed. Officials associated with most of 
those hospitals reported multiple reasons for closure; however, the primary reasons 
were as follows: 
<	 Business decisions: Twenty-five (43.1 percent) reported that the reason for 
closure was based on relocation, consolidation, or merger. 
<	 Number of patients: Fourteen (24.1 percent) attributed closure to low 
occupancy/low census. 
<	 Medicare and Medicaid reimbursements: Six (10.3 percent) reported 
insufficient Medicare and/or Medicaid reimbursements as reasons for closure; 
however, officials with five of those facilities stated that other factors, such as 
low occupancy, also contributed. 
<	 Other reasons: The remaining 13 (22.4 percent) reported various other 
reasons, such as competition or rising costs. 
ii 
Trends in Rural Hospital Closure: 1990-2000  OEI-04-02-00610  	 During 1990-1997, we reported on the reasons for hospital closure in four of our 
annual reports (1990, 1993, 1996, and 1997); however, that information did not 
differentiate between urban and rural closures.  During those years, hospitals (urban 
and rural combined) generally closed because of low occupancy, lagging revenues, 
rising costs, or a combination of those factors. 
Following a closure, alternative forms of health care were often available within the 
community. 
	 Most rural residents had access to inpatient and emergency services within 20 miles of 
the closed hospital. 
<	 Inpatient care: In 138 of the 208 (66.3 percent) rural communities where a 
hospital closed, inpatient care was available within 20 miles of the closed 
hospital.  Furthermore, residents in 185 (88.9 percent) of those communities 
could get inpatient care within 30 miles from the closed hospital. 
<	 Emergency care: In 163 of the 208 (78.4 percent) rural communities where a 
hospital closed, emergency care was available within 20 miles of the closed 
hospital. Residents in 201 (96.6 percent) of those communities could get 
emergency care within 30 miles from the closed hospital. 
	 Rural hospital openings, critical access hospitals, and rural health clinics have reduced 
the overall impact of rural hospital closure. 
<	 Hospital openings: During 1998-2000, 28 rural hospitals either opened or 
reopened, reducing the national impact of the 58 rural hospitals that closed 
during that those 3 years. Additionally, 64 hospitals (urban and rural) opened 
or reopened from 1990 through 1997. Prior to 1998, however, we did not 
identify such data specific to rural or urban classifications. Therefore, we 
cannot identify how many of the 64 openings were in rural communities. 
<	 Critical Access Hospitals: As of May 2002, 604 critical access hospitals 
(CAHs) were operating in rural areas across the country.  The critical access 
classification is intended to provide an increased level of Medicare 
reimbursements to small rural hospitals -- potentially avoiding closure. 
<	 Rural Health Clinics (RHCs): Of the 58 rural hospitals that closed from 1998 
through 2000, 40 of the buildings were either used for or located less than 20 
miles from a rural health clinic. Furthermore, in 32 of those communities, 
multiple RHCs were less than 20 miles from the closed hospitals.  We did not 
maintain such data prior to 1998. 
3 
Trends in Rural Hospital Closure: 1990-2000  OEI-04-02-00610  T A B L E   O F   C O N T E N T S  
PAGE

EXECUTIVE SUMMARY ...................................................... i

INTRODUCTION ............................................................. 2

FINDINGS 
Extent and Characteristics of Rural Hospitals That Closed ........................... 5

Number of rural hospitals that closed  ....................................5

Characteristics of rural hospitals that closed  ...............................6

Reasons for Rural Hospitals Closure .......................................... 10

Impact of Rural Hospital Closure  ............................................11

Distance to inpatient and emergency care  ................................11

Factors that reduced the impact of rural hospital closure  .....................13

APPENDICES 
A. Rural Hospital Closures By State ..........................................15

B. Medicare and Medicaid Utilization ......................................... 17

ACKNOWLEDGMENTS ..................................................... 19

1 
Trends in Rural Hospital Closure: 1990-2000  OEI-04-02-00610  I N T R O D U C T I O N  
OBJECTIVE 
To summarize the extent, characteristics, reasons for, and impact of rural hospital closures from 
calendar years 1990 through 2000. 
BACKGROUND 
Hospital closures have generated concern among the health care industry, government leaders, 
and the general public. Of particular interest were the reasons for and impact of the closures. 
In May 1989, the Office of Inspector General (OIG) released a report describing the 
phenomenon of urban and rural hospital closures within the United States during calendar year 
1987.  Many users of that information encouraged us to continue a yearly analysis to determine 
the rate of closure as well as trends in the characteristics and circumstances of hospitals that 
closed. Consequently, we conducted similar annual inspections documenting hospitals that 
closed through calendar year 2000. 
In 1993, the OIG released a report that addressed trends associated with rural hospitals that 
closed from 1987-1991, Trends in Rural Hospital Closure: 1987-1991"(OEI-04-92-00441). 
Our current inspection broadens that information and reports on the issue of rural hospital 
closures during 1990-2000.  We are issuing a separate report documenting the unique 
circumstances that led to urban hospital closures, Trends in Urban Hospital Closure: 1990-
2000" (OEI-04-02-00611). 
METHODOLOGY 
To determine the extent, characteristics, reasons for, and impact of rural hospital closures 
during calendar year 1990-2000, we reviewed and expanded upon the information previously 
documented in our annual hospital closure reports.  For those reports, we compiled hospital 
data from two Centers for Medicare & Medicaid Services (CMS) databases: the Hospital 
Cost Report Information System (HCRIS) and Provider of Service (POS) file.  For each 
hospital that closed, we obtained cost report data accounting for the most recent full fiscal year 
prior to closure.  Additionally, we interviewed officials associated with each of the closed 
hospitals as well as representatives from state hospital and licensing agencies. 
2 
Trends in Rural Hospital Closure: 1990-2000  OEI-04-02-00610  We compiled data for hospitals that closed during the entire 11-year trend period -- including 
average number of beds, average occupancy, Medicare and Medicaid utilization, and the 
average number of patients affected -- by calculating weighted averages using the data we 
collected from our previous hospital closure reports. Due to rounding, some minor variation 
may exist between the data in this report when compared to the data in our annual hospital 
closure reports. Additionally, we compiled net income data directly from HCRIS. 
To supplement the data, we contacted state licensing and certification agencies, state hospital 
associations, and state health planning agencies. Further, we surveyed various officials that 
were directly or indirectly associated with each hospital. Such officials included: 
<  Former hospital executives and physicians of the closed rural facilities, 
<  Executives from nearby hospitals, 
<  Local health and government officials, and 
<  Officials associated with parent corporations of closed hospitals. 
We determined the distance from closed rural hospitals to the closest operating hospitals and 
emergency services using maps and mapping programs (e.g., Mapquest) in addition to the 
information provided by the various officials we interviewed. 
We used data sets previously developed for our annual hospital closure reports to quantify rural 
hospitals that opened from 1998 through 2000. Prior to 1998, we did not identify such data 
specific to rural or urban classifications. The reported data was an aggregated total of openings 
and reopenings. 
We analyzed the Balanced Budget Act of 1997 and the Balanced Budget Refinement Act of 
1999 to determine the advantages and requirements specific to critical access hospitals. 
Additionally, we obtained a complete listing of Rural Health Clinics (RHCs) from CMS Online 
Survey Certification Report System (OSCAR). We used SAS to quantify the approximate 
distance from RHCs to the rural hospitals that closed from 1998 through 2000.  Distance was 
determined by cross referencing the zip code of each closed hospital with the zip code of each 
RHC. 
We used the following definitions as we examined rural hospitals that closed during calendar 
years 1990-2000: 
Rural Hospital:	 A facility located in a rural area that provided general, short-term, acute 
medical and surgical inpatient services. 
3 
Trends in Rural Hospital Closure: 1990-2000  OEI-04-02-00610  Closed Hospital:	 A facility that stopped providing general, short-term, acute inpatient 
care during 1990-2000.  We did not consider a hospital closed if it: 
<	 Merged with, or was sold to, another hospital but the physical 
plant continued to provide inpatient acute care, 
<  Converted to critical access status, or 
<	 Both closed and reopened during the same calendar year and 
at the same physical location. 
We conducted our inspection between July 2002 and December 2002.  We conducted this 
inspection in accordance with the Quality Standards for Inspections issued by the Presidents 
Council on Integrity and Efficiency. 
4 
Trends in Rural Hospital Closure: 1990-2000  OEI-04-02-00610  F I N D I N G S  
For more than a decade, the closure of rural hospitals has generated considerable public 
interest. This issue also generated concern among the health care industry and Congress. 
Specific areas of interest included the extent, characteristics, reasons for, and impact of hospital 
closures. Our national review of rural hospital closures that occurred from 1990 through 2000 
revealed that: 
<  Two hundred-eight hospitals closed -- 7.8 percent of all rural hospitals. 
<	 Rural hospitals that closed were generally smaller and treated fewer patients than rural 
hospitals nationally. 
<	 Generally, rural hospital closures resulted from business-related decisions or a low 
number of patients. 
<	 Following a closure, alternative forms of health care were often available within the 
community. 
Extent and Characteristics of Rural Hospitals That Closed 
Number of rural hospitals that closed 
During 1990-2000, 208 rural hospitals closed.  At the beginning of the trend period,  5,466 
general, short-term, acute care hospitals were included nationally in CMS HCRIS database. 
Of those, 2,667 (48.8 percent) were classified as rural hospitals. 
Rural Hospitals in the U.S. in 1990  2,667

Rural Hospitals that Closed from 1990 through 2000  208 (7.8%)

The average annual rate of hospital closure was less than 1 percent. The most closures for any 
given year occurred in 1991, when 36 rural hospitals closed.  The lowest number occurred in 
1994, when 5 rural hospitals closed.  See Appendix A for state-specific data.  Figure 1 
illustrates the annual rate of rural closure. 
5 
Trends in Rural Hospital Closure: 1990-2000  OEI-04-02-00610  During the 11-year period, hospital closures reduced the inpatient bed supply in rural areas by 
3.7 percent (8,228 of the 220,028 rural beds nationally at the beginning of the trend period). 
Characteristics of rural hospitals that closed 
Size : On average, rural hospitals that closed were considerably smaller than those that 
remained open.  During 1990-2000, the closed hospitals averaged 39.6 beds compared to an 
average of 75.4 beds for rural hospitals nationally.  An annual comparison of hospital size is 
illustrated in the figure below. 
6 
Trends in Rural Hospital Closure: 1990-2000  OEI-04-02-00610  Occupancy: During the 11-year trend period, rural hospitals that closed had an average 
occupancy rate of 25.4 percent compared to an average of 35.6 percent for rural hospitals 
nationally.1 Additionally, on an annual basis, occupancy was consistently lower for rural 
hospitals that closed.  An annual comparison of average occupancy is illustrated in the following 
figure. 
Net income : The average net income (the year prior to closure) for rural hospitals that closed 
was $1,488 compared to an average of $799,560 for rural hospitals nationally.  A net loss for 
the closed hospitals occurred in 7 out of the 11 years that made up the trend period. In 
contrast, rural hospitals nationally averaged a positive net income for each of the 11 years. An 
annual comparison is illustrated in Figure 4. 
1We calculated average occupancy by dividing the actual number of patient days by the total bed days available for 
rural hospitals nationally (including those that closed). Then we summed the results and divided by the respective numbers of 
rural hospitals -- closed and nationally. 
7 
Trends in Rural Hospital Closure: 1990-2000  OEI-04-02-00610  The high average net income for rural hospitals that closed in 2000 is attributed to multiple 
consolidations or changes in location2 that occurred during that year. Those same factors 
contributed to a higher average size and occupancy for 2000. 
Nine of the 22 rural hospitals that closed reported a positive net income for their previous fiscal 
year. Of those nine facilities, six closed their existing facilities to move to new, state-of-the-art 
buildings and three closed to consolidate services that were already under the same ownership. 
The following table shows the difference in size, occupancy, and net income for 2000 when the 
nine profitable facilities are removed from the averages. 
Average Occupancy, Size, and Net Income For Rural Hospitals That Closed in 2000 
Occupancy  Size (# of beds)  Net Income 
Overall Averages  35.1%  64  $1,360,713 
Averages without the Nine 
29.1%  63  ($1,399,130) 
Medicare and Medicaid utilization: According to hospital cost report data for 1990 through 
2000, rural hospitals that closed had slightly lower Medicare and Medicaid utilization rates than 
rural hospitals nationally.  The average Medicare utilization for rural hospitals that closed was 
53.9 percent, compared to 55.5 percent for rural hospitals nationally.3 
2When a hospital changes location, we report this to be a closure; however, the closure is offset by an opening based on 
the new location. 
3We calculated average Medicare utilization by dividing the Medicare patient days by total patient days for rural 
hospitals nationally (including those that closed). Then we summed the results and divided by the respective numbers of rural 
hospitals -- closed and nationally. 
8 
Trends in Rural Hospital Closure: 1990-2000  OEI-04-02-00610  Similarly, Medicaid utilization for the closed hospitals was 11 percent, compared to the national 
average of 12.1 percent.4 See Appendix B for annual Medicare and Medicaid utilization data. 
Figure 5 highlights the overall average utilization rates for closed rural hospitals and rural 
hospitals nationally. 
Number of patients affected: Consistent with their small size and low occupancy rates, rural 
hospitals that closed during 1990-2000 reported a low daily census in the year prior to closure. 
Total patients: Nationally, rural hospitals averaged 27 patients per day in contrast to 10 
patients among the rural hospitals that closed. 
CLOSED RURAL HOSPITALS :  TOTAL PATIENT CENSUS 
Average Number of Beds  39.56 
Average Occupancy Rate  x 25.36% 
Average Number of Patients Daily  10.03 
Medicare and Medicaid patients: The average number of rural Medicare patients per day 
was 15 nationally, compared to 5 for the hospitals that closed.  Furthermore, the average 
number of Medicaid patients per day was three nationally, in contrast to one in rural hospitals 
that closed. 
4Medicaid utilization is calculated in the same way as Medicare utilization. 
9 
Trends in Rural Hospital Closure: 1990-2000  OEI-04-02-00610 CLOSED RURAL HOSPITALS : MEDICARE AND MEDICAID CENSUS 
Medicare  Medicaid 
Average Number of Patients Daily  10.03  10.03 
Average Medicare and Medicaid Utilization Rate  x 53.85%  x 10.99% 
Average Number of Medicare and Medicaid Patients  5.40  1.10 
Reasons For Rural Hospital Closure 
Officials reported various factors that contributed to rural hospital closures. The primary 
reasons, however, were business-related decisions, such as relocations, consolidations, or 
mergers or a low number of patients (low occupancy/low census). Additionally, hospitals 
closed due to other factors, including rising costs or lagging revenues. 
During 1990-1997, we reported the reasons for hospital closure in four of our annual reports 
(1990, 1993, 1996, and 1997); however, that information did not differentiate between urban 
and rural closures.  During those years, hospitals (urban and rural combined) generally closed 
because of low occupancy, lagging revenues, rising costs, or a combination of these factors. 
From 1998 through 2000, we collected information specific to the reasons for rural hospital 
closure.  To determine those reasons, we interviewed senior executives, legal council, or other 
officials associated with the closed hospitals. Though some officials reported more than one 
reason for closure, the following information focuses on what they stated to be the primary 
reasons. 
Fifty-eight rural hospitals closed from 1998 through 2000.  Officials associated with 25 (43.1 
percent) of those hospitals reported that the primary reason for closure was a business-related 
decision, such as relocation, consolidation, or merger.  Fourteen (24.1 percent) of the closures 
were attributed to a low number of patients (low occupancy/low census).  Only 6 (10.3 
percent) of the hospital officials reported insufficient Medicare and/or Medicaid reimbursements 
as the primary reasons for closure. Of those six officials, five stated that other factors, such as 
low occupancy and rising costs, also contributed. 
The remaining 13 (22.4 percent) hospitals were reported to have closed for various other 
reasons, such as competition or rising costs. Figure 6 provides a comparison of the primary 
reasons for rural hospital closure. 
10 
Trends in Rural Hospital Closure: 1990-2000  OEI-04-02-00610  Impact of Rural Hospital Closure 
Distance to inpatient and emergency care 
Inpatient care : In 138 of the 208 (66.3 percent) rural communities where a hospital closed, 
inpatient care was available within 20 miles from the closed hospital. Furthermore, residents in 
185 (88.9 percent) of those communities could get inpatient care within 30 miles from the 
closed hospital. For example, in 2000, a Michigan facility closed as a full-service hospital and 
transitioned to outpatient only. The closest 
full-service hospital was located 15 miles from that facility. In that case, the two facilities were 
under the same ownership and made this change to avoid a high percentage of overlapping 
services. 
In the remaining 23 of the 208 (11.1 percent) rural communities where a hospital closed, full-
service inpatient care was located greater than 30 miles from the closed hospital.  For example, 
in 1992, 2 hospitals closed in Montana that were 35 and 38 miles from the closest full-service 
hospitals.  However, one of those facilities continued to provide outpatient service along with 
very limited inpatient care and the other was planning to do the same. 
Figure 7 shows summary information on the distances closed hospitals were from inpatient care 
that was still available. 
11 
Trends in Rural Hospital Closure: 1990-2000  OEI-04-02-00610  Emergency care : When hospitals close, communities potentially lose access to emergency 
services as well as inpatient care.  In 163 of the 208 (78.4 percent) rural communities where a 
hospital closed, emergency care was available within 20 miles of the closed facility. 
Furthermore, residents in 201 (96.6 percent) of those communities could get emergency care 
within 30 miles from the closed hospital. For example, an Ohio hospital that closed in 1998 
was within 5 miles from the closest emergency care. In that case, the emergency care was 
located within a full-service hospital. 
In the remaining 7 of the 208 (3.4 percent) rural communities where a hospital closed, 
emergency care was greater than 30 miles from the closed facility. For example, in 1993, 1 
hospital that closed in Michigan was 35 miles from the closest 24-hour emergency service. 
Figure 8 shows summary information on the distances closed hospitals were from emergency 
care that was still available. 
12 
Trends in Rural Hospital Closure: 1990-2000  OEI-04-02-00610  Factors that reduced the impact of rural hospital closure 
Hospital openings: Many hospitals opened or reopened in rural communities from 1990 
through 2000, reducing the national impact of hospital closure.  Prior to 1998, however, we did 
not identify such data specific to rural or urban classifications. From 1990 through 1997, 64 
hospitals (urban and rural combined) opened or reopened.  Those 64 hospitals are an 
aggregated total of openings and reopenings; therefore, we cannot identify how many of them 
were in rural communities. 
During 1998-2000, 28 rural hospitals either opened or reopened, reducing the national impact 
of the 58 rural hospitals that closed during that timeframe.  Figure 9 illustrates the net number of 
rural hospital closures for those 3 years. 
13 
Trends in Rural Hospital Closure: 1990-2000  OEI-04-02-00610  As stated earlier in the report, 25 (43.1 percent) of the rural hospitals that closed from 1998 
through 2000 were due to business-related decisions, such as relocation, consolidation, or 
merger. Of those closures, 12 (48 percent) were the direct result of relocation to newer 
buildings. When a hospital changed location, we reported it as a closure because the hospital 
had stopped providing general, short-term, acute care services in the physical plant from which 
it moved. However, for each of the 12 hospitals that relocated, the closure was offset by an 
opening of hospital services within a new building -- less than 5 miles from the old building. 
Therefore, impact on access to care was minimal when a hospital relocated. 
Critical Access Hospitals: As of May 2002, 604 critical access hospitals (CAHs) were 
operating in rural areas across the country.  The critical access classification is intended to 
provide an increased level of Medicare reimbursements to small rural hospitals -- potentially 
avoiding closure. 
The Balanced Budget Refinement Act (BBRA) of 1999 requires hospitals classified as critical 
access to be more than 35 miles from another hospital; however, in rough terrain, such as 
mountainous or secondary roads, the requirement is 15 miles. Additionally, they must provide 
24-hour emergency service, have no more than 15 acute care beds, and maintain an average 
length of stay of no more than 96 hours per patient. 
CAHs meet our definition of general, short-term, acute care hospitals.  Therefore, hospitals that 
made this conversion were not counted as closures, and those that opened were not 
differentiated from other openings. Though we could not directly quantify the extent that the 
critical access classification reduced the impact of rural closures, the 604 CAHs operating in 
2002 do provide access to hospital services in the rural areas where they are located. For 
example, a Wyoming hospital that closed in 1993 was able to reopen in 2000 as a CAH. 
Rural Health Clinics: A variety of alternatives to hospitals were used in rural areas across the 
United States. For example, of the 58 rural hospitals that closed from 1998 through 2000, 40 
of the facilities either converted to, or were located less than 20 miles from, a Rural Health 
Clinic (RHC). In 32 of the communities, multiple RHCs were less than 20 miles from the 
closed hospitals.  For example, a rural California community lost its hospital in 1998; however, 
5 RHCs were located less than 20 miles from the closed facility. 
14 
Trends in Rural Hospital Closure: 1990-2000  OEI-04-02-00610  APPENDIX A 
RURAL HOSPITAL CLOSURES BY STATE

During the 11-year trend period, rural hospitals closed in 39 states 
Texas had the greatest number of rural closures (24), followed by Minnesota and Mississippi 
(15), Kansas (10), Montana (9) and California and Louisiana (8). These 7 states account for 
43 percent of all rural hospital closures from 1990 through 2000.  The figure and table that 
follow show the frequency of rural closures for each state. 
Rural Closures By State 
Rate of Rural Closure 
> 10  (3) 
6 - 10  (12) 
1 - 5  (24) 
No Closures  (12) 
15 
Trends in Rural Hospital Closure: 1990-2000  OEI-04-02-00610  APPENDIX A cont. 
Number of Rural Hospital Closures By State (1990-2000) 
Texas  24 
Minnesota  15 
Mississippi  15 
Kansas  10 
Montana  9 
California  8 
Louisiana  8 
Alabama  7 
Iowa  7 
Missouri  7 
Oklahoma  7 
Tennessee  7 
Arkansas  6 
Georgia  6 
Michigan  6 
North Dakota  5 
Nebraska  5 
Colorado  4 
Illinois  4 
Ohio  4 
Oregon  4 
South Dakota  4 
Wisconsin  4 
North Carolina  3 
South Carolina  3 
Utah  3 
West Virginia  3 
Florida  2 
Idaho  2 
Indiana  2 
Kentucky  2 
New Mexico  2 
New York  2 
Virginia  2 
Wyoming  2 
Arizona  1 
Maryland  1 
New Hampshire  1 
Vermont  1 
16 
Trends in Rural Hospital Closure: 1990-2000  OEI-04-02-00610  APPENDIX B 
MEDICARE AND MEDICAID UTILIZATION

Medicare utilization: Rural hospitals that closed had an average Medicare utilization of 53.9 
percent compared to an average of 55.5 percent for rural hospitals nationally. Medicare 
utilization was slightly higher among rural hospitals that closed in 4 of the  11 years, as 
shown in the following figure and table. 
Annual Medicare Utilization Rates for Rural Hospitals 
Year  1990  1991  1992  1993  1994  1995  1996  1997  1998  1999  2000 
National Avg. %  51.2  51.8  53.4  54.8  55.5  57.1  58.0  59.0  59.3  56.1  56.1 
Closed Avg. %  48.4  48.6  52.6  60.4  55.4  58.1  49.2  65.6  55.2  58.5  52.9 
17 
Trends in Rural Hospital Closure: 1990-2000
 OEI-04-02-00610  APPENDIX B cont. 
Medicaid utilization: Rural hospitals that closed had an average Medicaid utilization of  11 
percent compared to an average of 12.1 percent for rural hospitals nationally.  Although these 
averages are comparable, the yearly statistics show some variation as shown in the following 
figure and table. 
Annual Medicaid Utilization Rates for Rural Hospitals 
Year  1990  1991  1992  1993  1994  1995  1996  1997  1998  1999  2000 
National Avg. %  10.6  11.8  13.0  12.7  12.6  11.9  11.9  12.0  11.3  13.0  12.7 
Closed Avg. %  12.3  10.3  9.3  7.5  13.8  7.8  7.4  7.2  12.3  13.8  17.0 
18 
Trends in Rural Hospital Closure: 1990-2000
 OEI-04-02-00610  A C K N O W L E D G M E N T S  
This report was prepared under the direction of Bill Moran, Acting Regional Inspector General for 
Evaluation and Inspections in the Atlanta Regional Office and Graham Rawsthorn, Assistant Regional 
Inspector General. Other principal Office of Evaluation and Inspections staff who contributed include: 
Kevin Lawrence, Lead Analyst  Tricia Davis, Director, Medicare and Medicaid 

Joe Townsel, Team Leader  Linda Moscoe, Program Analyst 

Gerius Patterson, Program Analyst

19 
Trends in Rural Hospital Closure: 1990-2000  OEI-04-02-00610