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Hospital closure: an efficiency analysis.

J R Lynch1, Y A Ozcan

  • 1Virginia Health Services Cost Review Council, Richmond 23219.

Hospital & Health Services Administration
|July 1, 1994
PubMed
Summary
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Market forces do not solely drive hospital closures. Inefficient hospitals were not at higher risk, and surprisingly, efficiency weakly predicted closure in this study on hospital market competition.

Area of Science:

  • Health economics
  • Hospital management
  • Healthcare policy

Background:

  • Hospital closures are a growing concern, potentially impacting healthcare access.
  • Market forces are often cited as a primary driver of these closures.
  • Previous research on hospital efficiency and closure risk used limited measurement methods.

Purpose of the Study:

  • To investigate the hypothesis that market forces lead to hospital closures.
  • To determine if inefficient and underutilized hospitals in competitive markets face higher closure risks.
  • To apply data envelopment analysis for a more accurate efficiency assessment.

Main Methods:

  • Logistic regression analysis was employed to model hospital closure risk.
  • Data envelopment analysis (DEA) was used to create a hospital efficiency index.

Related Experiment Videos

  • The study analyzed factors influencing hospital closures in competitive markets.

    • Main Results:

    • Mixed support was found for the market forces hypothesis.
    • Contrary to expectations, inefficient hospitals did not show a significantly higher risk of closure.
    • Hospital efficiency was a weak, but positive, predictor of closure.

    Conclusions:

    • Market forces alone may not fully explain recent hospital closures.
    • Hospital inefficiency is not a direct precursor to closure risk.
    • Further research is needed to understand the complex factors influencing hospital viability and closure.