Hospital Closures:
Moving From Failure to Revitalized Community Resources

The number of hospitals in mid-sized and large cities in many regions of the country has dropped steadily and substantially since 1980. Small community hospitals and rural facilities have also closed in large numbers as hospitals become victims of marketplace dynamics, mismanagement, financial hardships, and mergers and acquisitions. In the past 20 years, more than one-third of Massachusetts hospitals have closed. More recently, New York Governor George Pataki announced he wants to form a commission to evaluate whether his state, with about one-third of its hospital rooms unoccupied, has too many hospitals.

News of hospital closures can be devastating for neighborhoods and communities, sparking fears about job losses and mass departures of physicians. But hospital closures can present rare opportunities to put the hospital facility or land to a different use that could potentially provide an attractive array of services and amenities previously unavailable to community residents.

Reuse options typically fall within two categories -- each possessing advantages and disadvantages that vary depending on the nature of the community where the hospital closure occurs and the factors driving the closure. The first category is converting hospital space to non-acute medical facilities, which occurs most frequently when a hospital does not cease operations, but moves to a new location. The second category is use of the former hospital site for residential, commercial, or community facilities, typically through the sale of the site to a development company.

Hospital Reuse Success Story:
Germantown Hospital

When Philadelphia’s Germantown Hospital joined the Albert Einstein Healthcare Network in 1997 the hospital was losing over $3 million per year. The hospital’s average daily census was 60 -- less than one-quarter of its licensed beds. In 1999, Germantown’s inpatient beds were transferred six blocks away to Albert Einstein Medical Center, and nearly all employees affected by the bed transfer accepted new positions within the system. The Germantown facility was then converted to create Germantown Community Health Services, with services that emphasize care for women, children, and the elderly. The facility includes a 170-bed nursing home, 24/7 emergency department that admits patients to Albert Einstein Medical Center, outpatient diagnostic and treatment services, and physician offices.

Hospital Reuse Success Story:
Morrisania Hospital

Morrisania Hospital served one of the Bronx’s lowest-income areas until its closure in 1976. The hospital remained vacant for 20 years until the Women’s Housing and Economic Development Corporation partnered with the city and other agencies to obtain $23 million in loans, grants, and other financing to convert the hospital into the award-winning Urban Horizons Economic Development Center. Completed in 1997, the center includes low-income apartment units, job training programs, a family health center, fitness center, Head Start program, and a magnet school.

Success Factors

The Germantown and Morrisania success stories demonstrate two key considerations when evaluating hospital reuse options.

• When hospitals cease inpatient operations, community needs should be of paramount importance. Hospitals are valuable community resources, sources of great community pride, and often key employers. The Germantown Hospital conversion enabled the community to have greater access to outpatient care and senior services, continued access to emergency facilities, and minimal job losses.
• Financial distress often drives hospital closures, making financial commitments to facility reuse appear daunting. Creative financing structures in partnership with other organizations can help alleviate the strain. The Morrisania Hospital conversion was made possible by loans and grants from state, federal, and private funds.
  

For more information on hospital reuse options, contact Erica Baittinger or
Alan Zuckerman, or call 215-636-3500.