title: Converting to critical access status: how does it affect rural hospitals' financial performance?
abstract: To improve rural access to care, the Balanced Budget Act of 1997 allowed eligible rural hospitals to convert to critical access hospitals (CAHs), which changed their Medicare payment from a prospective payment system (PPS) to a cost-based system. The objective of this paper is to examine the effects of CAH conversion on rural hospital operating revenues, operating expenses, and operating margins using an eight-year panel of 89 rural hospitals in Iowa. Ad hoc hospital revenue, cost, and profit functions were estimated using panel data fixed-effects linear models. We found that rural hospital CAH conversion was associated with significant increases in hospital operating revenues, expenses, and margins.
authors.affiliation: Division of General Internal Medicine, University of Pennsylvania, 19104, USA. penli@mail.med.upenn.edu
authors.forename: Pengxiang
authors.initials: P
authors.lastname: Li
authors.forename: John E
authors.initials: JE
authors.lastname: Schneider
authors.forename: Marcia M
authors.initials: MM
authors.lastname: Ward
mesh_terms: D002017:Budgets; D003422:Critical Care; D006297:Health Services Accessibility; D017721:Hospital Costs; D006780:Hospitals, Rural / Q000145:classification / Q000191:economics* / Q000706:statistics & numerical data; D007484:Iowa; D006278:Medicare / Q000191:economics; D015233:Models, Statistical; D009936:Organizational Innovation; D012051:Reimbursement Mechanisms; D014481:United States