Impact of choice on hospital viability

John Appleby
Publication:  Health Service Journal
Reference:  HSJ, vol II5, no 5945, pp 23

Asked recently whether politicians would be prepared to see hospitals close as a result of patients' choices, health secretary John Reid said: 'This politician is. I back the patients. If the public who own public services say they prefer the quality here rather than there, they are better placed to decide than providers.' He assumes decisions will be based on the 'quality' of services provided; but if by quality he means the outcome of care, there are no measures available that come close to capturing this view.

More likely, patients will rely on GPs to advise them – the same GPs who have been referring to the same hospitals for years. Given that GPs seem to have a pretty negative view on the current choice policy (see charts one and two), the impact of the pattern of referrals could be slight. Patients will also perhaps rely on semi-clinical or non-clinical measures – for example, waiting times or whether parking is free.

But some patients will switch and patient flows will change. How many patients making a choice to switch will it take to make a hospital unviable to the point of closure? And if a hospital does close, what are the costs (and benefits) in terms of local access, healthcare costs, overall efficiency etc?

The answer to the first question is that even a small minority of patients switching could threaten the viability of a hospital. Marginal changes could be important (as could the pressure on hospitals that the threat of movement might have).

So what might be the effects in the extreme case that a hospital loses enough custom to threaten its existence? A recent US study of the impact of urban hospital closures on access and health outcomes in Los Angeles County from 1997-2003 suggested that the resulting increase in distance to the nearest hospital shifted regular care away from emergency rooms and outpatient clinics to doctors' offices.

Most people, the study found, were unaffected by closures. But those on low incomes reported more difficulty in accessing care. The researchers also found evidence that increased distance to hospitals raised infant mortality rates, plus stronger evidence that it increased deaths from unintentional injuries and heart attacks.

Overall, however, the economists involved in this study estimated that the savings in hospital costs outweighed the value of lives lost (see chart three). It is a mighty utilitarian trade off to make, and those bearing the costs of hospital closure are not the same as those who benefit.

Ultimately, the decision is whether we value efficiency gains of hospital closures more highly than equity losses.

© Copyright 2005 Emap