Closing "Bad" Hospitals

8:20 AM    
The New York Times reports today on how difficult it is in New York State to close a poorly performing hospital. University Hospital in Syracuse, owned by the State University system in New York, has a high rate of infections and complications, and a low rate of compliance with national guidelines. A state commission recommended it be merged into another hospital.

But the hospital's administration has lobbied hard, and its unions are important ally. A year after the Berger Commission recommended that University Hospital be merged (and shrunk), there has been no progress.

Why is it so hard to close an "underperforming" hospital?
1) Jobs - hospitals are the major employers in many communities
2) Convenience - closing hospitals usually means that someone will have to travel further for care
3) Professionals - Physicians are reluctant to move from one facility to another
4) Patient loyalty - I remember the public outcry in Massachusetts when a number of small community facilities closed.

Does closing underperforming hospitals lower the cost of care?

Not necessarily. While closing a hospital means there is less capital deployed and could decrease supply-induced demand, weaker hospitals slated for closure often have lower rates, and patients move to higher cost facilities. This is not the case with University Hospital in Syracuse, where costs are above the state average. Of course, all costs must be risk adjusted for severity of illness. The data cited in the Times regarding University Hospital IS risk adjusted, although it's always possible to argue the risk adjustment is not adequate.

In Massachusetts, the cardiac surgery program at UMass Memorial was closed in 2005 due to higher than expected risk-adjusted mortality. The program was voluntarily shut just before legally mandated state public reporting of mortality statistics. The leadership at UMass has written honestly about the experience, and ultimately recruited a new team of cardiac surgeons and now has reopened with excellent safety metrics. UMass lost its cardiac surgery training program due to this event. (Harvard link) (Non Harvard link)