On September 19, 2025, the Government Accountability Office (GAO) released a report on urban hospital closures and the effects on the community after such closures. Titled “Urban Hospitals: Factors Contributing to Selected Hospital Closures and Related Changes in Available Health Care Services,” the report examines hospitals that closed in 2022 or 2023 (the hospitals are not identified by name) and analyzed HHS data concerning those closures. GAO also interviewed representatives from these five hospitals, along with other stakeholders including representatives from nearby hospitals, other healthcare providers, community organizations, state hospital associations, and local government officials.
GAO found that financial decline in the form of financial losses or declining profits was a factor at all five of the hospitals it studied. For instance, one of the hospitals had been losing millions of dollars each year, and the hospital’s health system owner decided to redirect the funds that it had been using to support the struggling hospital. Another hospital had been the subject of three bankruptcy filings in the five years prior to its closure. All five of the studied hospitals had profit margins that were lower than the median for urban hospitals in the year prior to their closure, and four had margins that were lower than the 25th percentile.
Four of the selected hospitals experienced low or declining inpatient volumes, which can contribute to financial decline, with occupancy rates between 19 and 27%, far lower than the median rate of 64% for all urban hospitals nationally, which results in the hospitals incurring staffing costs without the necessary patient revenue. Hospital representatives cited reduced services, few employed physicians, and competition from a nearby hospital for this low and declining volume. Representatives from some of the hospitals also cited a recent reduction in services, challenges maintaining staffing levels, fewer physician referrals, and a recently opened hospital about five miles away.
All five of the studied hospitals also had aging physical infrastructure that was outdated and costly to maintain, which also contributed to the closures. For instance, one hospital’s campus was over 100 years old, had frequent water leaks due to holes in the roofs and aging pipes, and was in disrepair due to a lack of investment. A hospital representative at one of the selected hospitals estimated that it would cost approximately $50 million in infrastructure spending to make the hospital viable, while CMS Medicare Cost Report data showed that that hospital had lost over $43 million in fiscal year 2021.
GAO also found that ownership and management practices contributed to the closures. For instance, GAO found that two of the five hospitals were not part of a larger health system, which meant less leverage when negotiating payment rates and higher costs for things like electronic health record systems and other investments. Two of the hospitals also had separate owners for the hospital business and the real estate, which may have contributed to closure by impeding the sale of one and imposing financial risks on the other. Inconsistent billing and poorly maintained financial records also contributed to lower revenue at two hospitals.
After closure of the five studied hospitals, availability of inpatient and some outpatient services either shifted or decreased in the hospitals’ communities. Two of the closed hospitals continued to provide some outpatient services or transferred some services to nearby hospitals. Although patients at all five hospitals had alternative providers available, stakeholders interviewed by GAO noted that patients of one of the selected hospitals likely had to travel farther to access certain services, including obstetrics.
The full Report can be found here.
