The etiology and determinants of hospital closure

This article examines the etiology of hospital closure and the correlates of hospital closure and the extent of similarity in this organizational outcome between pre- and post-Prospective Payment System (PPS) implementation. It also replicates a study from an earlier time period. Findings support the study's main hypotheses: in more stringent and turbulent markets, institutional and strategic variables are more important determinants of hospital closure. Merger acquisitions are found to be similar to both system acquisitions and autonomous hospitals. Standard Metropolitan Statistical Area (SMSA) status and regulation show an effect on hospital closure and merger acquisition. While many similarities exist when compared to the replicated study and findings prior to PPS implementation, it appears that sufficient differences exist to support the hypothesis that the PPS has an impact upon hospital organizational outcome.