Center for Health Industry Market Economics (CHIME) Kellogg School of Management
Center InformationContactKellogg Homepage
Mission
Faculty
Research
Doctoral Students
 
 
 
 
Index
Search
Internal Site
Northwestern University

Research

Hospital Closure and Economic Efficiency
Capps, C., Dranove, D., Lindrooth, R.

Abstract: We present a new framework for assessing the effects of hospital closures on social welfare and the local economy. While patient welfare necessarily declines when patients lose access to a hospital, closures also tend to reduce costs. We study five hospital closures in two states and find that urban hospital bailouts reduce aggregate social welfare: on balance the cost savings from closures more than offset the reduction in patient welfare. However, because some of the cost savings are shared nationally, total surplus in the local community may decline following a hospital closure.

Hospital Closure and Economic Efficiency (PDF 431 KB)

Back to Research

©2001 Kellogg School of Management, Northwestern University