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When most hospitals close, it’s plain to see. Equipment and fixtures are hauled out and carted away. Doctors and nurses leave and buildings are shuttered, maybe demolished.

But another fate befalling U.S. hospitals is almost invisible. Across the country, conglomerates that control an increasing share of the market are changing their business models, consolidating services in one regional “hub” hospital and cutting them from others.


In recent years, hospitals across the country have seen their entire inpatient departments closed — no patients staying the night, no nursery, no place for the sickest of the sick to recover. These facilities become, in essence, outpatient clinics.

Hospital executives see these cuts as sound business decisions, and say they are the inevitable consequence of changes in how people are using medical services. But to patients and local leaders who joined forces with these larger health networks just years ago, they feel more like broken promises: Not only are they losing convenient access to care, their local hospitals are also getting drained of revenue and jobs that sustain their communities.

“It’s not even just betrayal. It’s disgust, frankly,” said Mariah Lynne, a resident of Albert Lea, Minn., where Mayo Clinic is removing most inpatient care and the birthing unit from one of its hospitals. “Never would I have expected a brand of this caliber to be so callous.”

In 2015, the most recent year of data, these service reductions accounted for nearly half of the hospital closures recorded around the country, according to the Medicare Payment Advisory Commission. (By MedPac’s definition, the loss of inpatient wards is equivalent to closure.) These data do not capture more discreet closures of surgical and maternity units that are also happening at local hospitals.


And the trend doesn’t just affect nearby residents. It represents a slow-moving but seismic shift in the idea of the community hospital — the place down the street where you could go at any hour, and for any need. Does the need for that hospital still exist, or is it a nostalgic holdover? And if it is still needed, is it economically viable?

The eye of the storm

The effort to scale back inpatient care is occurring within some of the nation’s most prestigious nonprofit hospitals.

Mayo Clinic announced last summer that it would cease almost all inpatient care at its hospital in Albert Lea. The health network said it would keep the emergency department open, but send most other patients to Austin, 23 miles east.

In Massachusetts, sprawling Partners HealthCare said it will shut the only hospital in Lynn, a city of 92,000 people near Boston, and instead direct patients to its hospital in neighboring Salem. Only urgent care and outpatient services will remain in Lynn.

And in Ohio, Cleveland Clinic has made similar moves. In 2016, it closed its hospital in Lakewood, a densely packed Cleveland suburb. It is replacing the hospital with a family health center and emergency department.

The cuts follow a period of rapid consolidation in the health care industry. Of the 1,412 hospital mergers in the U.S. between 1998 and 2015, nearly 40 percent occurred after 2009, according to data published recently in the journal Health Affairs.

As large providers have expanded their networks, they have also gained inpatient beds that are no longer in demand — thanks to improved surgical techniques and other improvements that are shortening hospital stays. Hence the closures.

But the hollowing-out of historic community hospitals has surfaced fundamental tensions between providers and the cities and towns they serve. Residents are voicing frustration with large health networks that build expensive downtown campuses, charge the highest prices, and then cut services in outlying communities they deem unprofitable.

Health scholars also note a growing dissonance between the nonprofit status of these hospitals and their increasing market power. While the nonprofits continue to claim tens of millions of dollars a year in tax breaks to serve the sick and vulnerable, some are functioning more like monopolies with the clout to shift prices and services however they wish.

“These providers say they are worth the high price and that in the American system, if you have a reputation for excellence, you deserve higher fees,” said Dr. Robert Berenson, a senior fellow at the Urban Institute. “My response to that would be, if we had a well-functioning market, that might make some sense. But we don’t.”

Lynn Union
Activists gathered in Lynn, Mass., in July 2014. Essdras M Suarez/The Boston Globe
Union Hospital Lynn
Union Hospital in Lynn will only house urgent care and outpatient services while moving inpatient services to Salem. Essdras M Suarez/The Boston Globe

Changing demand among patients

The financial upheaval in community hospitals is driven by sweeping changes in the delivery of care. Procedures and conditions that once required lengthy hospitalizations now require only outpatient visits.

At Mayo Clinic, Dr. Annie Sadosty knows this evolution well because it roughly traces her career. She uses appendectomies as an example. Twenty-five years ago, when she was in medical school, the procedure was performed through a 5-inch incision and resulted in a weeklong hospitalization.

Today, the same procedure is done laparoscopically, through a much smaller incision, resulting in a recovery time of about 24 hours. “Some people don’t even stay in the hospital,” Sadosty said.

Something similar could be said for a wide range of medical procedures and services — from knee replacements to the removal of prostate glands in cancer patients. Hospital stays are either being eliminated or reduced to one or two days. And patients who were once routinely admitted for conditions like pneumonia are now sent home and managed remotely.

“Hospitals that used to be full of patients with common problems are no longer as full,” said Sadosty, an emergency medicine physician at Mayo and regional vice president of operations. “It’s been a breakneck pace of innovation and change that has led to a necessary evolution in the way that we care for people.”

That evolution has cratered demand for inpatient beds. In 2017, the Medicare Payment Advisory Commission noted that hospital occupancy is hovering around 62 percent, though the number of empty beds varies from region to region.

In Albert Lea, Mayo administrators said the changes at the hospital will only impact about seven inpatients a day. Currently, caring for those patients requires nursing staff, hospitalists, and other caregivers, not to mention overhead associated with operating a hospital around the clock. The financial result is predictable: Hospital executives reported that jointly Albert Lea and Austin hospitals have racked up $13 million in losses over the last two years.

With inpatient demand declining, hospital administrators decided to consolidate operations in Austin. The decision meant the removal of Albert Lea’s intensive care unit, inpatient surgeries, and the labor and delivery unit. Behavioral health services will be consolidated in Albert Lea.

Cleveland Clinic described similar pressures. Dr. J. Stephen Jones, president of the clinic’s regional hospital and family health centers, said use of inpatient beds has declined rapidly in Lakewood, dropping between 5 and 8 percent a year over the last decade. By 2015, 94 percent of visits were for outpatient services — a change that was undermining financial performance. The hospital lost about $46.5 million on operations that year, according to the clinic’s financial statements, and its aging infrastructure was in need of repair.

“Hospitals are very expensive places to run,” Jones said. “Lakewood was losing money on an operating basis for at least five years” before this decision was made.

Closures spark fierce protests

But the service cuts in Albert Lea, Lynn, and Lakewood — backed by nearly identical narratives from hospital executives — provoked the same reaction from the communities surrounding them.


Residents accused the hospital chains of putting their bottom lines above the needs of patients. Even if these individual hospitals were losing money, they said, nonprofits have an overriding mission to serve their communities.

“Why is profit such a priority, and more of a priority than the Hippocratic oath?” said Kevin Young, a spokesman for Save Lakewood Hospital, a group formed to oppose Cleveland Clinic’s removal of inpatient services. “Why are we allowing this to happen?”

The fight over Lakewood Hospital has persisted for more than three years, spawning lawsuits, an unsuccessful ballot referendum to keep the hospital open, and even a complaint filed by a former congressman to the Federal Trade Commission. None has caused Cleveland Clinic to reverse course.

Meanwhile, in Albert Lea, opponents to the service cuts have taken matters into their own hands: With Mayo refusing to back down, they are hunting to bring in a competitor.

A market analysis commissioned by Albert Lea’s Save Our Hospital group concluded that a full-service hospital could thrive in the community. The report included several caveats: A new provider would need to attract new physicians and capture market share from Mayo, a tall order in a region where Mayo is the dominant provider.

But members of the group said the findings directly contradict Mayo’s explanations to the community. They argue that, far from financially strained, the health system is simply trying to increase margins by shifting more money and services away from poorer rural communities.

“They don’t care what happens in Albert Lea,” said Jerry Collins, a member of the group. “Mayo cares what happens with its destination medical center.” He was referring to Mayo’s $6 billion project — funded with $585 million in taxpayer dollars — to expand its downtown Rochester campus and redevelop much of the property around it.

Sensitivity to Mayo’s service reductions is heightened by its control of the market in Southeastern Minnesota. It is by far the largest provider in the region and charges higher prices than facilities in other parts of the state. A colonoscopy at Mayo’s hospital in Albert Lea costs $1,595, compared to $409 at Hennepin County Medical Center in Minneapolis, according to Minnesota HealthScores, a nonprofit that tracks prices. The gap is even bigger for a back MRI: $3,000 in Albert Lea versus $589 at Allina Health Clinics in Minneapolis.

“All of Southeast Minnesota is feeling the domination of one large corporation,” said Al Arends, who chairs fundraising for Save Our Hospital. “They are ignoring the economic impact on the community and on the health care for patients.”

The community’s loud resistance has drawn the attention of the state’s attorney general and governor, as well as U.S. Rep. Tim Walz, who has begun a series of “facilitated dialogues” between Mayo and its opponents in Albert Lea.

So far, the dialogue has failed to forge a compromise. Mayo is proceeding with its plans. It has relocated the hospital’s intensive care unit to Austin, and inpatient surgeries and labor and delivery services are planned to follow.

Mayo executives reject the notion that they are abandoning Albert Lea or compromising services. The hospital plans to renovate the Albert Lea cancer wing and beef up outpatient care, improvements executives say have gotten lost amid the criticism.

As for inpatient care, they say, Mayo must consider quality and safety issues. With the hospital in Albert Lea only admitting a handful of patients a day, caregivers’ skills are likely to diminish, potentially undermining quality. They also cited recruiting challenges.

“It’s difficult to outfit both [Albert Lea and Austin] hospitals with all the incumbent equipment, expertise, multidisciplinary teams, and nursing staff,” vice president Sadosty said. “This is one way we can preserve and elevate care, and do it in an affordable way so our patients have access to high-quality care as close to their homes as possible.”

A strained system

Efforts to regionalize medical services also pose a new challenge: Can hospitals transport patients fast enough — and coordinate their care well enough — to ensure that no one falls through the cracks?

It is a question that will face stroke victims and expectant mothers who now must drive greater distances, sometimes in treacherous conditions, to make it to the hospital on time.

In Massachusetts, Partners HealthCare will face that test as it moves inpatient and emergency care from Union Hospital in Lynn to North Shore Medical Center in Salem. The hospitals are less than 6 miles apart. However, the short distance belies the difficulty of coordinating service across it.

Ambulances will have fewer options in emergencies. And if residents drive themselves to the wrong place in a panic, precious time gets wasted.

Dr. David Roberts, president of North Shore Medical Center, said the health system is working to educate patients to ensure that they go to the correct facility. He added that Partners already conducts risk assessments of patients with severe medical problems, and transfers them to hospitals with higher-level care when necessary.

In cases of suspected stroke, Roberts said, Partners employs a telemedicine program in which patients who arrive in its emergency rooms are examined by physicians at Massachusetts General Hospital in Boston. “They instantly, based on imaging, can decide which patient might benefit from having a clot pulled out of an artery in their head,” Roberts said. “They can say, ‘Yeah, this patient needs to be in our radiology suite in the next 30 minutes, and they make that happen.”

Still, opponents of the closure say it raises a broader concern about whether Partners’s actions are driven by a financial strategy to shift care away from low-income communities with higher concentrations of uninsured patients and those on Medicaid, which pays less for hospital services than commercial insurers. Union Hospital serves a largely low-income population.

“Why don’t we see these cuts across the Partners system? Why are we only seeing it in Lynn?” said Dianne Hills, a member of the Lynn Health Task Force. “Are we moving into a world where you have two systems of care — one for the poor and the old, and another for the affluent?”

Roberts said the consolidation at North Shore Medical Center in Salem has nothing to do with the income level of population in Lynn. He said the hospitals serve “identical” mixes of patients with government and commercial insurances.

“Our payer mix at both hospitals is adverse,” he said. “And despite that, Partners invested $208 million” to support the expansion of North Shore Medical Center.

Roberts acknowledged that the closure of the hospital in Lynn will have a negative impact on the city’s economy. But he said construction of a $24 million outpatient complex will mitigate some of that damage. The facility is expected to open in 2019. “It doesn’t take away the sting of losing a hospital,” Roberts said. “I’m hoping the [new] building goes a long way. We’re going to grow it as a vibrant medical village.”

Meanwhile, Mayo is proceeding with its changes in Albert Lea. Executives have assured Albert Lea residents that they will receive the same level of care for emergency services and upgraded facilities for outpatient care.

But some community members said they are already noticing problems with Mayo’s regionalization. One local pharmacist, Curt Clarambeau, said he can’t get timely responses to reports of adverse drug reactions. A call to the hospital in Albert Lea results in several phone transfers and no immediate response.

“It’s just impossible. It takes days,” Clarambeau said. “They’re trying to create efficiencies by not having everyone calling the doctors, but there are certain things we need to talk to them about.”

Don Sorensen, 79, said he’s also had trouble getting access to doctors at the hospital in Albert Lea. He said began to suffer from severe knee pain in November, but couldn’t get an appointment. His wife was put on hold for 40 minutes before learning the earliest appointment was still several days away.

At the suggestion of his RV repairman, Sorensen called a clinic in Minneapolis and got an appointment the same day. His wife, Eleanor, drove him, and he ended up with a brace, a prescription, and another follow up appointment.

But the couple is worried about continuing to make the drive if the logjam persists in Albert Lea. “We used to feel secure because we had Mayo here,” Eleanor Sorensen said. “We could get the care we needed. But now everybody our age feels very very vulnerable.”

  • An often overlooked issue with consolidation is that when a patient gets fired from a practice they get fired from an entire SYSTEM where as before it would have been just a small doctor office with plenty of choices left. Jackson, MS, for example, has almost all of its doctors locked into one of 4 hospital systems. A patient conceivably could end up with no doctor who would see them. Anywhere in town. These systems are also sucking up specialists into their systems. While a city might be able to support 2 doctors treating a certain cluster of cancers, there aren’t enough patients to support 4 – yet each hospital has one specialist for that. The end result is that then that doctor has to treat a wider range of diseases to fill their day and everyone loses. It is harder to keep current with more diseases, specialists aren’t quite as specialized now… both docs and patients lose.

  • Sorry, but since To Err is Human, the various regression studies have been associations – not causative. This has been true for the quality studies, cost studies, and health insurance coverage studies. Even the primary care people promote more primary care as a solution when in fact the places with the most primary care have the most advantaged and their best plans and social determinants while most of the nation has the worst plans, half enough workforce, and the least advantaged in numerous dimensions – much more powerful for shaping outcomes.

    The studies comparing all hospitals including rural vs urban and small vs large were particularly worthless. Just as bad are large vs small volume studies. What shapes outcomes are patient factors – not clinical. Numerous influences across the years before admission and after admission shape outcomes.

    Baicker and Chandra in NEJM in December issued a call for evidence based accountability in these studies – so far few are listening. The old ways of the past 20 years have massively increased costs for no gain in quality and have helped to destroy access to care.

    The basic small practices and small hospitals doing care where needed have entirely different workforce, lesser local resources, worse conditions, more combinations of diseases, and the least health care dollars. In fact the design for health creates disparities as seen in 13% of health spending for 2621 counties lowest in workforce with 40% of the US population.

    Any joker with a large database can select out variables of their choice to demonstrate the variable of their choice – while ignoring dozens of others. Saurahb Jha MD has pointed out the errors of these studies and the journals still publish them and the new corporations promote these into profits to claim to deliver on cost and quality.

    The designers far away have assumed overutilization to be the problem even for half of the population defined by underutilization – where cuts and regulatory changes make matters worse for them and those that provide care. No one listens to Kip Sullivan or others making these points either. CMS is not doing so. MedPAC has had flashes of understanding but failed to have the courage to stick with evidence basis.

    There are examples of bad situations that can be brought up. The media is very good about this, but it takes discrimination by design to take down hundreds of small hospitals and hundreds of small practices with more to come.

    Meanwhile 2800 counties with half of the population by 2040 are awaiting some design, any design, that actually will send even a few more dollars a year their way after adjusting for increasing costs of regulation and innovation and micromanagement. Until then workforce will shrink as population grows and more counties are added to behind by design.

  • Little Chestertown, Maryland (pop. 3,700 on The state’s rural Eastern Shore) cried foul when local doctors revealed that their 31-bed hospital was going to lose inpatient and some specialty services (maternity and pediatrics were already gone). The parent University of Maryland Medical System’s 3-hospital division, Shore Regional Health, was going to consolidate inpatient services in larger Easton, 36 miles away. The state legislature blocked the closing and ordered an 18-month study. The study group unanimously agreed that Chestertown needs inpatient care for health and economic well-being and said the state should underwrite the cost of inpatient care and surgery. The 2018 General Assembly is now contemplating legislation that will do just that. If you want more on this so-far-successful “Save Our Hospital” story, I’ll be happy to give you contacts and details.

    • Margie
      So the entire state will have to pay for the 36-mile trek for the VERY few locals?? At 31 beds there is NO possibility to function properly or efficiently in fact short of minor issues there is NO way that staff can be effectively current on the skills needed as compared to their sister facilities
      Sure I get the convenience factor but if you were in need of coronary stenting or by-pass do you really want it done at a hospital with 37 beds after being forced to remain open by state mandate?
      We need to instead of looking for convenience start to look for outcome-based treatment
      Sure it is nice to be close to home and have family not have to drive to visit but I prefer the best in skill to take care of my family not someone who might “have seen one of them last year or so”
      Medical care is changing and even with all the bad mouthed personal posts by the likes of rude people like Stef the facts are facts and the small out of the way facilities NEED to go away for the benefit of the bigger facilities having sufficient income to buy equipment and hire talent to provide OUTCOME based care not just convenient warm and fuzzy care
      I have been a surgeon for going on 4 decades and have been a Senate advisor for the past 3 years and I can tell you any attachment to the old ways we used to work is just that attachments. We are ranked 37th in the civilized world for healthcare outcomes. We have the second highest rate of maternal death in the civilized world. It is time we focus on outcomes and not accommodation
      Done pressure business to do what is against their fiscal process it won’t bode well and besides, it is not sustainable.
      Sure Maryland can get it funded this time around but in 2 years, or 5 or 8? At some point, the balloon must pop and return to sanity to shutter a small facility unless it is truly indispensable (like in the outlying areas of Wyoming or Alaska
      Dr. Dave (Head and Neck Surgical Oncology)

  • The article is not new. I was originally from PA and decades ago we looked at hospital utilization and opted to close “my hospital” in favor of enlarging the “mother hospital” across the city. Yes we increased some travel time but overall we had only one facility to have to bring in the best of the best to and equip
    I hated it initially since it meant I could no longer roll out of bed and into my OR but after a while, I got used to it and although I am way older then the current generation of robot using surgeons the extra tools and toys were well appreciated
    It is also MUCH easier to round at only one place then trekking across town to 3
    I find the article interesting it states “A colonoscopy at Mayo’s hospital in Albert Lea costs $1,595, compared to $409 at Hennepin County Medical Center in Minneapolis” and yet the elephant in the room is that they are losing MILLIONS per year even with the higher rates charged and being the largest contract provider in the area for care services.
    So the issue is insufficient use. If there is an 8% drop per year of in-hospital patients why have the rooms sitting idle with RNs and the like watching TV and eating pizza?
    Surely if we ask the staff they are plenty busy but the numbers don’t support that assumption
    Here in Florida we have the opposite issue my current hospital just built a third new wing to add more beds we built one 7 years ago to add on to the initial facility now we needed another one
    This facility is a satellite to the main campus as well as 35 other campuses all of which are filled to various levels
    I think it is time we look to technology as a positive not a negative
    If someone can connect to a doc via video teleconference and avoid the entire trip to the ED why not embrace that? If a post-surgery patient can be discharged and recovered at home with some technology why even consider an admission? I have easily cut my admission rate by 50% over the last 3++ decades of practice
    Why not allow the patient to recover at home if possible and save the entire cost of inpatient care? The only REAL reason the people at Mayo and Boston and Cleveland are complaining is that they are used to one way of care and need to get re-educated to a new world way and their care quality will be equal if not better with far less cost
    In the examples, the hospitals were even keeping the ED open so no issue with emergent care then if things go pearshaped there is always air-evac which is what we do for all invasive cardiac services. It is cheaper to call for the bird then to staff a full thoracic unit 24/7 for the few who need it
    Dr. Dave (Head and neck surgical Oncology)

    • I will be interested in your comments when you get a heart and a soul. Please don’t worry “Dr Dave”( what a cute name) recovery from obtaining a heart and soul is outpatient.. or maybe a stay at a church or temple to understand what it means to have to have a heart and soul.

  • Small hospitals have been killed off by the hundreds starting with payment designs too low plus costs of delivery accelerated along with complexity of care. This Triple Threat designed by those in higher concentration counties with Big Health has destroyed Small Health Care along with primary care, women’s health, basic services, mental health, and basic hospital services. DRGs began the attack and took down hundreds of small hospitals in just a few years with closures continuing at 1 – 2 per month.

    This has led to 2621 lowest workforce concentration counties with half enough workforce for these basic services that are 90% of local services. They are paid 15% lower for the same services and have 5 – 10% lower collections. They have also been penalized as it costs them twice as much for HITECH to ACA to MACRA to Primary Care Medical Home compared to those largest and most organized – worsening disparities in dollars, health access, and local economics. Attempts to increase outcomes appear to be widening disparities to worsen outcomes.

    MD DO NP PA and RN workforce is more and more distorted resulting in more of the American health care design. Too much for too few and costs too high in too few places leaving most Americans farther and farther behind – by design.

    DRG to MACRA has been implemented despite the known consequences of closure and compromise of those small and has had numerous other impacts not anticipated such as the creation of more costs (hospitalists) and the collapse of internal medicine primary care (hospitalists, Triple Threat) and 2 to 3 percentage point a year average declines in women’s health and surgical workforce from 2005 to the present.

    While others fiddle away with their innovations and distractions – most of the nation is slashed and burned by fewer dollars entering and more dollars leaving care where most needed.

    Congress has failed to act and CMS has made it worse – for decades. Promises by this current administration to deregulate have resulted in more regulation and higher costs and more uncertainty – resulting in less hope and more pressure to close those smaller.

    Calls for reasonable designs for finances have long been ignored.

    The sad fact is that this past year hits Red Counties hardest as these are the lowest workforce concentration counties along with 60 rural counties with majority minority who are even worse and have been for decades also.

    In 2040 or sooner, half the nation will be found in these places with least workforce and least local resources where the US fails to send more dollars while more counties, more people, more demand, and more complexity are added than anywhere else.

    • Bob
      That is what happens when Americans look to Gov to handle what should have been their INDIVIDUAL responsibility all long
      It started LONG before DRG it started with Johnson signed the Employee Benefits Act that allowed employers to deduct medical premiums and costs so that both sides could avoid paying taxes. Had employees been paid extra to buy their OWN way around the medical system this wouldn’t be an issue
      Insurance companies would follow the dictates of their customers which would be INDIVIDUALS and not corporations. Thinks like MACRA and the like are designed after the fact to fix what should never have happened to start with and what the stupid American population thinks that by taking still further would resolve matters
      Single payer is the final nail in the coffin of the system. If we think it is bad now take a SERIOUS look at what would happen if single payer was applied to the current striated market
      The ONLY place to get even basic care would be the big cities and even then the wait times would be measured in weeks, not minutes or hours.
      There are ONLY two ways to limit health care costs and that is to raise premiums and copays so that people underutilize until they actually DO get sick and then the savings is lost or by reducing exposure so that there are not so many exposures to things less essential. By limiting exposure we basically create a two-tiered system which is the ABSOLUTE way a capitalistic system ALWAYS works
      In our system, those with cash will have unfettered access while those who don’t won’t PERIOD
      That is the reality! If someone with cash is willing to pay 50% more and in cash TODAY to get an appointment today then someone with welfare who the doc is going to have to wait 45 days to MAYBE collect who is going to get the appointment?
      I know the society somehow feels it is awful to have a tiered healthcare provision system but that is the way it works here and in EVERY nation on planet earth
      Healthcare is not a right health is up to the individual and prioritizing it is the key to keeping it on your side
      How many people who are screaming about costs of care and inconvenience also own Apple iPhones and Xbox games and Ford F150 trucks?
      Medicine is a business and keeping open hospitals that lose money regardless of the profit aspect must be shuttered. Hey the local society can change that, they can elect to pay cash for services and opt to receive elective procedures so as to fill in bed usage but that is impossible as we all know
      Dr. Dave

  • As a resident of Lakewood, Ohio and a former staff nurse at Lakewood Hospital, I am in absolute agreement of its closure. there is no lack of available acute care as there are three hospitals that are each less than four miles away. The hospital census was extremely low, patients were not scheduling elective procedures there, it was bleeding money every minute that we were open. The talented staff was not utilizing their skills as well as they could be in a higher volume site. It made sense to combine services at other sites. Despite public outcry our city health needs have not gone untreated.

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