Two new reports reveal that the number of acute-care hospital closings rose last year for the first time since 1988.
Although the number of closings still was the second-lowest annual total in more than a decade, the rise may reflect an important change in hospital consolidation strategies.
In the past, hospitals and hospital systems that merged with or acquired other facilities typically kept those facilities open. Now, when hospitals and systems buy their competitors, they are often shutting them down in the name of eliminating excess hospital beds.
For example, Columbia/HCA Healthcare Corp., the nation's largest for-profit hospital chain, reported closing or planning to close at least seven hospitals last year in markets where it already operates at least one other hospital (Sept. 4, 1995, p. 42).
Columbia executives didn't respond to an interview request regarding its latest hospital closure totals.
The first report documenting the increase in closures comes from HHS' inspector general's office. In a 17-page report released earlier this month, the inspector general said 37 acute-care hospitals closed last year, up from 16 in 1994.
The office has been releasing annual reports on hospital closings since 1989, when the first brouhaha erupted over the annual hospital closure statistics released by the American Hospital Association. Rep. Fortney "Pete" Stark (D-Calif.) accused the AHA of inflating its closure data to enhance its efforts to lobby for higher Medicare and Medicaid payments to hospitals. AHA executives, who blamed closings largely on inadequate Medicare and Medicaid reimbursement, denied the allegations.
Another such controversy occurred last month, when the AHA got itself in hot water with both political parties. During the second presidential debate, President Clinton, who said he was quoting AHA figures, stated that 700 hospitals would have closed if Republican budget plans would have passed last year (Oct. 28, p. 60).
What AHA executives said they said was that 700 hospitals could be financially hurt by the budget plans because they derive two-thirds of their revenues from Medicare and Medicaid, and that some of those hospitals could close. AHA executives had to publicly rebut what the president said and make amends with offended Republicans.
The AHA stopped releasing its traditional hospital closure report last year, saying it was an outdated method of tracking changes in the hospital industry (June 5, 1995, p. 2).
The AHA still tallies closures in-house, and it released its latest figures last week to MODERN HEALTHCARE. Although the AHA's figures are slightly different from the inspector general's, they were the second report to confirm the change in the hospital closure trend.
According to the AHA, the number of hospitals that stopped providing acute-care services rose to 30 last year from 17 in 1994. Like the inspector general's findings, last year's total was the second-lowest number of closings in more than a decade recorded by the AHA.
The AHA also reported that 13 specialty hospitals closed last year, including seven psychiatric facilities.
The inspector general's report had no information about specialty hospitals, but it did provide a detailed breakdown of the 37 acute-care hospitals that it said shut down last year.
Nearly all the hospitals that closed had fewer than 200 beds. Twenty-four were in urban areas and 13 were in rural areas, the inspector general's office said.
The report also found that four new acute-care hospitals opened last year, and one that closed in 1991 reopened in 1995. And, of the 37 hospitals that closed, nearly one-half were converted to other uses such as urgent-care clinics, home health agencies or long-term-care facilities.
Eleven of the hospitals were in Texas, far outpacing second-place Louisiana, which had three. No other state had more than two hospitals close during 1995.
Supporting the view that many closures were the result of hospitals shutting down newly acquired competitors, the inspector general's report said the closings last year would have little effect on access to acute-care hospital services.
All the Medicare beneficiaries in urban areas and 75% of the beneficiaries in rural areas had access to another hospital within 20 miles of the shuttered facility, the inspector general said. Residents of all but one rural community had access to emergency care within 20 miles, the agency found.