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Article
Hospital Closure and Hospital Choice: How Hospital Quality and Availability will Affect Rural Residents
Economics Working Papers
  • Deepak Premkumar, University of California, Berkeley
  • Dave Jones, United States Air Force
  • Peter Orazem, Iowa State University and IZA
Publication Date
11-29-2016
Number
16009
Abstract

This study estimates a model of rural patient hospital choice between the nearest rural hospital, the nearest urban hospital, or the nearest research hospital. We present separate estimates for inpatient and outpatient visits, for different diagnoses, and for emergency and nonemergency admissions. The analyses illustrate the tradeoffs between hospital quality and distance in deciding whether to choose the nearest hospital or to travel farther for an alternative. The model parameters are used to simulate two hospital closing scenarios for both outpatient and inpatient data: 1) closing 25% of lowest quality rural hospitals and 2) closing 15% of the least used rural hospitals. Closing 25% of the lowest quality rural hospitals results in a 20.7% increase in expected distance and a 7.7% increase in expected hospital quality for those with inpatient ailments. Closing the least used hospitals modestly increases average distance but lowers average quality. We conclude that closing the lowest quality rural hospitals is a better policy prescription than closing the least used hospitals since closing low quality hospitals results in a substantial increase in average quality of hospital with only a slight increase in distance traveled for chosen hospitals.

File Format
application/pdf
Length
36 pages
Citation Information
Deepak Premkumar, Dave Jones and Peter Orazem. "Hospital Closure and Hospital Choice: How Hospital Quality and Availability will Affect Rural Residents" (2016)
Available at: http://works.bepress.com/peter-orazem/113/