Examining Closure Rates of Rural Hospitals: An Assessment of a Strategic Taxonomy

This article reports a study of rural hospital failure. Testing a model previously suggested by Drain and Godkin (1996), analysis incorporated four financial ratios used to graphically depict the external environment of a hospital or portfolio of hospitals relative to that of an average facility. Applied to a random sample of rural hospitals, the evidence supports the model's ability to exhibit clustering differences on five of seven selected structure-related variables, and trend activity for the group of hospitals that failed during the period under study.