With rural hospital closures becoming more common, integrated health system Ballad Health has announced that Harvard Medical School researcher Michael Chernew, Ph.D., will lead an independent study to evaluate hospital competition in small rural markets, examining how service offerings and expenses are affected by rural hospital closures and mergers.
The research will be conducted in coordination with the East Tennessee State University Center for Rural Health Research. The study will examine the competitive dynamics of small hospital markets characterized by areas with relatively low population density and a small number of competing hospitals. Hospitals in these markets typically employ a substantial proportion of the local population and have a significant influence over the local economy. Recent data suggest that many hospitals in these small markets are struggling financially and failing to keep pace with the adoption of the latest technology and best practices.
Chernew, the Leonard D. Schaeffer Professor of Health Care Policy and the Director of the Healthcare Markets and Regulation Lab at Harvard Medical School, was recently named chair of the Medicare Payment Advisory Commission (MedPAC).
“The acute care hospital industry has undergone substantial restructuring during the last few decades, and in recent years this frequently involves health systems that stretch across markets and state lines,” said Chernew, in a prepared statement. “While several studies have examined the effect of mergers and acquisitions on prices and quality, most have focused on urban markets. Small rural and non-urban markets differ in ways that could affect the social benefits and costs of hospital consolidation.”
The project will:
• Identify and study small markets with three or fewer hospitals and assess how these markets have evolved over time, including predictors of hospital closure and acquisition among hospitals in these markets and whether they are purchased by chains from outside of the market.
• Measure service offerings and expenses in small markets and assess how these have evolved over time and how they are affected by closure and merger, including estimating the availability of high-expense services, and hospital expenses, to create benchmark levels that can be used to judge over- or under-capacity.
Ballad Health operates 21 hospitals in Northeast Tennessee and Southwest Virginia, The recent announcement follows on a partnership between Tennessee Gov. Bill Lee, the Tennessee Legislature and Ballad Health last July to create the Center for Rural Health Research at ETSU – a multidisciplinary institute for research impacting rural health. Over a 10-year period, Ballad Health’s $15 million contribution commitment was matched with nearly $10 million by the governor and Tennessee legislature.
“We know that health is driven not only by healthcare services, but income, education, race and a host of other so-called social determinants,” said Randy Wykoff, M.D., M.P.H., the dean of the ETSU College of Public Health and director of the Center for Rural Health Research, in a statement. “ETSU’s highly ranked public health program will combine with the best healthcare economics team in the country at Harvard to build knowledge that will help bridge research and policy gaps in rural and non-urban health.”
