Critical Access Hospitals and Retail Activity: An Empirical Analysis in Oklahoma

Purpose: This paper takes an empirical approach to determining the effect that a critical access hospital (CAH) has on local retail activity. Previous research on the relationship between hospitals and economic development has primarily focused on single-case, multiplier-oriented analysis. However, as the efficacy of federal and state-level rural health subsidies come under increasing scrutiny, more comprehensive investigations can provide support for continued funding. Methods: Data from 105 rural Oklahoma communities are used to explore whether the presence of a CAH impacts several measures of retail activity. The measures are: total retail sales, total number of retail establishments, and number of micro and small retail establishments. Ordinary least squares regression is used to evaluate the impact of a CAH after controlling for a host of other factors influencing retail activity such as local demographics, unemployment rates, and the presence of a Wal-Mart. Findings: The presence of a CAH has a positive and significant influence on each measure of retail activity. The parameter estimates suggest that a CAH has a similar influence on rural retail sales as a Wal-Mart, increasing total retail sales by approximately 28% over towns without a CAH. Other model results indicate that a CAH presence significantly increases the number of total retail establishments and the number of micro and small business establishments. Conclusions: The positive results provide additional evidence on the far-reaching economic development impacts of CAHs. The results also emphasize the importance of continued support for these rural institutions, including federal and state subsidies. (Contains 1 figure and 3 tables.)