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This article investigates the cost incurred when hospitals have different levels of beds to treat a given number of patients. The cost of hospital care is affected by both the forecasted level of admissions and the actual number of admissions. When the relationship between forecasted and actual admissions is held constant, it is found that an empty hospital bed at a typical hospital in Michigan has a relatively low cost, about 13 percent or less of the cost of an occupied bed. However, empty beds in large hospitals do add significantly to cost. If hospital beds are closed, whether by closing beds at hospitals which remain in business or by closing entire hospitals, cost savings are estimated to be small.