|
Urban Hospital Closures
Urban hospitals have faced mounting pressures in recent years, with closures outpacing new openings from 2019 to 2023, according to a recent report from the Government Accountability Office. The GAO reviewed five urban hospitals that closed in 2022 and 2023 to better understand the financial and operational challenges leading to the shutdowns and how those closures reshaped the community's access to care.
Six things identified in the report:
1. Financial decline was universal. All five hospitals studied saw steady financial deterioration in the five years leading up to closure. Several posted recurring operating losses, while one cycled through three bankruptcies under different ownership groups during that period. Margins at these hospitals fell well below national medians for urban hospitals; three of the hospitals had profit margins from -30% percent to -13.5% in fiscal 2022, according to the report.
2. Aging infrastructure added pressure. Every hospital in the study faced costly demands to update or maintain aging facilities, a burden that compounded financial losses and deterred reinvestment. Aging hospital campuses — some more than a century old — needed tens of millions in repairs. Failing generators, water leaks and broken elevators underscored the capital burden many systems could not absorb.
3. Low inpatient volumes weakened stability. Four of the five hospitals had occupancy rates between 19% and 27% in 2022, compared with a 64% median for urban peers. Low volumes were tied to reduced services, limited employed physicians and competition from nearby hospitals. With fewer admissions, these hospitals struggled to generate the revenue needed to offset rising operating costs.
4. Independent hospitals were especially vulnerable. Operating outside of larger multi-hospital systems left some facilities without access to shared resources, economies of scale or financial safety nets. Poor management practices, such as billing errors or weak collection systems, also contributed to the financial slide, according to the report.
5. Service availability shifted unevenly. After closure, two hospitals continued to operate outpatient clinics, but three shut down entirely. In some cases, nearby providers expanded inpatient capacity, but other closures reduced access to emergency and inpatient services in already underserved neighborhoods.
6. Access challenges persist. Stakeholders reported patient barriers that remain today: inadequate transportation, lack of primary care access and continued reliance on emergency departments for routine needs.
| 
