Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/282575 
Year of Publication: 
2023
Series/Report no.: 
IZA Discussion Papers No. 16448
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
This study presents new evidence on the potential detrimental effects of hospital closures. We examine how hospital closures affect the likelihood of incurring medical debt. Hospital closures can increase market concentration by removing a competitor from the market. Closures can also have negative spillover effects on the local economy and affect the population's ability to pay their bills. We combine 2011-2020 consumer credit bureau data with information on hospital closures from 2014-2018 to assess the relationship between closures and medical debt. Using a stacked event study approach, we find that a closure that reduces hospital supply in a Hospital Referral Region (HRR) by 10 percent is associated with a 4 percent increase in the share of consumers with medical debt, with larger effects in HRRs that are urban and have higher rates of poverty. Moreover, we find that a hospital closure is associated with about a 6-8 percent increase in hospital market concentration. These findings suggest that the primary mechanism through which hospital closures affect medical debt is by reducing hospital competition in local markets.
Subjects: 
medical debt
hospital closures
hospital competition
JEL: 
I11
I14
I18
Document Type: 
Working Paper

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