Hospitals Closing – Difficult Choices

Today’s Managing Health Care Costs Indicator is 850

Much of the potential to lower health care costs involves decreasing preventable hospital admissions.  Among those patients with high costs, inpatient care represents the bulk of all costs.  Hospitals are high fixed cost businesses – so saving real money in the system means we have to take fixed costs out of the hospital sector.  This usually means eliminating hospital beds and closing hospitals.

A story in yesterday’s New York Times  points out how painful this is.

Huron Hospital, in East Cleveland, Ohio, is owned by Cleveland Clinic, one of the most successful integrated delivery systems in the country.  Cleveland Clinic announced that it will close Huron Hospital, which it says will cost 850 jobs.    It’s simultaneously opening a new ambulatory center nearby – but the number of jobs in the community will diminish.  

The headline in the Times talks about the inexorable march from inpatient care to outpatient care.  It is more silent on the social cost of hospital closure on a low-income community.

New York state faced this problem in 2006, when the governor appointed a commission to identify and eliminate excess hospital capacity in the health care system to lower overall health care costs.   The Berger Commission identified substantial excess capacity, and in many instances a poor neighborhood was adjacent to a middle class neighborhood, and each had a hospital.  The hospital in the low income neighborhood often had lower quality scores –but was almost always a major source of good jobs with benefits in the community. 

Closure of the hospital in the poor community would mean people with heart attacks would take longer to get to a hospital, but would also decrease the economic standard of living in a community already on the edge.   That commission ultimately recommended eliminating 7% of hospital beds in New York – and most of the closures were in middle class communities rather than in impoverished communities.

Hospitals have a complex relationship to community health.  Expensive health care can make a community less attractive to business, which can cause economic stagnation.  Closure of a hospital can help lower health care costs. However, loss of hospital-related jobs, especially in an impoverished community, can worsen health both by decreasing access and by eliminating good jobs from that community.