Hospitals with Chronic Financial Losses: What Came Next?

Abstract

Hospitals with chronic losses might respond by closing, by drastically changing their services and patient mix, or by increasing efficiency. These possible responses are examined by studying a cohort of hospitals that were losing money between 1980 and 1984 as measured by their five-year average total revenue margins. These "negative-cohort" hospitals were followed through 1988 to see if they survived, and if they did, what changes they made. Only about 10 percent of hospitals in the negative cohort closed. The remainder did not alter their service mix or select in favor of easier, better-paying patients. However, there was a reduced rate of investment in new technologies.