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Can Amputation Save the Hospital? The Impact of the Medicare Rural Flexibility Program on Demand and Welfare

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  • Schmidt-Dengler, Philipp
  • Gowrisankaran, Gautam
  • Lucarelli, Claudio
  • Town, Robert
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    Abstract

    This paper seeks to understand the impact of the Medicare Rural Hospital Flexi- bility (Flex) Program on rural resident hospital choice and welfare. The Flex program created a new class of hospital, the Critical Access Hospital (CAH), which receives more generous reimbursement in return for limits on capacity and length of stay. We fi nd that conversion to CAH status reduced inpatient admissions by a mean of 5.4%, of which almost all was driven by factors other than capacity. The program increased consumer welfare if it reduced the closure rate by at least 4 percentage points. --

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    File URL: http://econstor.eu/bitstream/10419/79920/1/VfS_2013_pid_248.pdf
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    Bibliographic Info

    Paper provided by Verein für Socialpolitik / German Economic Association in its series Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order with number 79920.

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    Date of creation: 2013
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    Handle: RePEc:zbw:vfsc13:79920

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    Web page: http://www.socialpolitik.org/
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    1. Harvey S. Rosen & Kenneth A. Small, 1979. "Applied Welfare Economics with Discrete Choice Models," NBER Working Papers 0319, National Bureau of Economic Research, Inc.
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