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MASA Insights    /    Hospital closures white paper

An unseen crisis: hospital closures throughout the U.S. limit access to care

Research and paper by Kemp Dolliver, CFA
Published on April 10, 2024

In this exclusive whitepaper, we delve into how structural pressures cause an increased risk of facility closures, leaving communities with longer ambulance rides and more limited access to care.

Hospital closures and rising medical transport costs 

The healthcare industry is facing a critical challenge with the increasing closure of hospitals across the United States. This trend is leaving communities vulnerable and leading to a rise in reliance on emergency medical transportation services. The American Hospital Association reports that out of over 5,100 community hospitals, approximately 65% serve urban/suburban areas, while 35% serve rural communities. These closures have significant implications, especially for rural areas, where communities are often left without access to alternative healthcare options.  

Four key factors contribute to sustainability challenges faced by healthcare facilities:

  • High fixed costs, 
  • Difficulty in retaining skilled medical staff, 
  • Low reimbursement rates for services, and  
  • Limited access to capital. 

As a result, many hospitals operate with narrow profit margins, making them vulnerable to closure.

Increased transport time, increased transport costs

The closure of hospitals not only affects access to healthcare but also leads to longer emergency transportation times. Research indicates that facility closures increase emergency transportation times, which can have adverse effects on patient outcomes, especially for acute conditions like trauma and heart attacks. Furthermore, the availability of obstetric services is also under pressure, with many maternity services and rural hospitals closing their obstetric units. This trend not only impacts maternal care but also contributes to longer transport times in emergency situations. These increases in transportation time also lead to rising emergency medical transportation costs. 

Mounting pressures and what’s next

Looking ahead, hospital facilities are expected to face significant financial challenges due to an aging population, increased demand for healthcare services, and the possibility of major legislative changes. These factors are likely to put a strain on healthcare facilities, staff, and budgets, which could lead to more hospital closures. 

The declining number of hospitals is a significant factor behind rising emergency medical transportation costs. Hospital closures, driven by industry and hospital-specific pressures, are expected to continue.  

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Kemp Dolliver, CFA, is the owner of Cherrystone Hill Consulting. He has over 35 years of experience as a healthcare analyst and investor in the public markets in both the U.S. and Asia.

MASA Global has commissioned this white paper. The views, thoughts, and opinions expressed in this white paper belong solely to the author based on sources deemed to be reliable. Kemp Dolliver and Cherrystone Hill Consulting assume no responsibility or liability for any errors or omissions in the content of this white paper. The information contained in this document is provided on an “as is” basis with no guarantees of completeness, accuracy, usefulness, or timeliness.