Inefficiency differences between critical access hospitals and prospectively paid rural hospitals.

Widener University.
Journal of Health Politics Policy and Law (Impact Factor: 0.96). 02/2010; 35(1):95-126. DOI: 10.1215/03616878-2009-042
Source: PubMed

ABSTRACT The Medicare prospective payment system (PPS) contains incentives for hospitals to improve efficiency by placing them at financial risk to earn a positive margin on services rendered to Medicare patients. Concerns about the financial viability of small rural hospitals led to the implementation of the Medicare Rural Hospital Flexibility Program (Flex Program) of 1997, which allows facilities designated as critical access hospitals (CAHs) to be paid on a reasonable cost basis for inpatient and outpatient services. This article compares the cost inefficiency of CAHs with that of nonconverting rural hospitals to contrast the performance of hospitals operating under the different payment systems. Stochastic frontier analysis (SFA) was used to estimate cost inefficiency. Analysis was performed on pooled time-series, cross-sectional data from thirty-four states for the period 1997-2004. Average estimated cost inefficiency was greater in CAHs (15.9 percent) than in nonconverting rural hospitals (10.3 percent). Further, there was a positive association between length of time in the CAH program and estimated cost inefficiency. CAHs exhibited poorer values for a number of proxy measures for efficiency, including expenses per admission and labor productivity (full-time-equivalent employees per outpatient-adjusted admission). Non-CAH rural hospitals had a stronger correlation between cost inefficiency and operating margin than CAH facilities did.


Available from: Michael D Rosko, Jun 08, 2015
  • [Show abstract] [Hide abstract]
    ABSTRACT: PurposeObservation care is used to evaluate patients prior to admission or discharge. Often beneficial, such care also imposes greater financial liability on Medicare beneficiaries. While the use of observation care has increased recently, critical access hospitals (CAHs) face different policies than prospective payment (PPS) hospitals, which may influence their observation care use.Methods We used 100% Medicare inpatient and outpatient claims files and enrollment data for years 2007 to 2009, and the 2007 American Hospital Association data to compare trends in the likelihood, prevalence and duration of observation stays between CAHs and PPS hospitals in metro and non‐metro areas among fee‐for‐service Medicare beneficiaries over age 65.FindingsWhile PPS hospitals are more likely to provide any observation care, the 3‐year increase in the proportion of CAHs providing any observation care is approximately 5 times as great as the increase among PPS hospitals. Among hospitals providing any observation care in 2007, the prevalence at CAHs was 35.7% higher than at non‐metro PPS hospitals and 72.8% higher than at metro PPS hospitals. By 2009, these respective figures had increased to 63.1% and 111%. Average stay duration increased more slowly for CAHs than for PPS hospitals.Conclusions These data suggest that a growing proportion of CAHs are providing observation care and that CAHs provide relatively more observation care than PPS hospitals, but they have shorter average stays. This may have important financial implications for Medicare beneficiaries.
    The Journal of Rural Health 08/2013; 29. DOI:10.1111/jrh.12007 · 1.77 Impact Factor
  • JAMA Internal Medicine 11/2013; 174(1). DOI:10.1001/jamainternmed.2013.11469 · 13.25 Impact Factor
  • Source
    [Show abstract] [Hide abstract]
    ABSTRACT: Introduction: The issue of evaluating the efficiency of health systems has been elaborated upon frequently. Since "health" is a multi-faceted concept, many variables of different measurement units must be included in its analysis; consequently, this presents a great obstacle for researchers to overcome. Materials and Methods: A novel statistical approach for evaluating the efficiency of organizational units is here proposed, which can also be easily applied to the health sector. For these purposes, the health status of the 27 countries belonging to the European Union has been examined by employing a statistical Ivanovic-Jeremic Distance Based Analysis (DBA) on various health indicators. Results: The subsequent outcome of the Distance Based Analysis has shown that Cyprus and Ireland have a most efficient health system sectors. Greece also has exceptional indicators of health service, yet health on the individual level is not comparable. Limitations: Since it synthesizes many variables into an efficiency score, a DBA can be easily applied to other regions/countries. However, the choice of input and output variables can be considered to be potential limitations since a different choice of variables may cause different efficiency scores for the countries selected. Conclusions: A DBA approach contributes significantly to the efficiency in the field of research measurement. This analysis can be additionally performed alongside DEA and SFA methods, as a new measure of efficiency.
    Hippokratia 04/2012; 16(2):170-4. · 0.36 Impact Factor