Rural Hospital Closures: Effects on Utilization and Medical Spending Among Commercially Insured Individuals

Access to health care continues to be a challenge, especially in remote areas. Since 2013, 70 rural hospitals have closed in the United States further exacerbating barriers to health care access in rural areas.

The objective of this study is to identify the impact of rural hospital closures on total medical spending and utilization among the commercially insured rural population.

We use a pre-post study design with a comparison group. Individual-level Texas commercial claims data in 2014-2019 were linked to the Centers for Medicare & Medicaid Services (CMS) Provider of Services Current Files, Area Health Resource File, and Census American Community Survey. We performed an event study to test for pre-trends.

Analysis sample included commercially insured individuals 19-64 years of age residing in Texas.

Total medical spending and counts of health care encounters.

Individuals residing in rural Texas areas affected by a hospital closure experienced decreases in outpatient and emergency department (ED) utilization and no statistically significant changes in total medical spending relative to the unaffected individuals. Outpatient and ED utilization decreased by 0.133 (<0.1) and 0.015 (7<0.05) visits, respectively. Heterogeneity analysis showed that individuals residing in urban Texas experienced increases in total medical spending by $12.2 per month (<0.01) as well as individual spending subcategories.

Rural hospital closures led to significant decreases in outpatient and ED utilization while having no effect on health care spending. Close attention must be paid to rural hospital closures to ensure equitable health care access, especially for underserved populations.