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The impact of the Medicare Rural Hospital Flexibility Program on patient choice

Author

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

Abstract

This paper seeks to understand the impact of the Medicare Rural Hospital Flexibility (Flex) Program on rural resident hospital choice. The program created a new class of hospital, the Critical Access Hospital (CAH), which receives more generous reimbursement in return for limiting its beds and services. The program's goal is to maintain access to hospital care. Estimates from a patient choice model show that patient utility from visiting a hospital was negatively affected by conversion. While the lower bed capacity appears to play a minor role, the reduction in services results in a 28% drop in admission rates.

Suggested Citation

  • Gowrisankaran, Gautam & Lucarelli, Claudio & Schmidt-Dengler, Philipp & Town, Robert, 2011. "The impact of the Medicare Rural Hospital Flexibility Program on patient choice," International Journal of Industrial Organization, Elsevier, vol. 29(3), pages 342-344, May.
  • Handle: RePEc:eee:indorg:v:29:y:2011:i:3:p:342-344
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    References listed on IDEAS

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    1. Cardell, N. Scott, 1997. "Variance Components Structures for the Extreme-Value and Logistic Distributions with Application to Models of Heterogeneity," Econometric Theory, Cambridge University Press, vol. 13(02), pages 185-213, April.
    2. Steven T. Berry, 1994. "Estimating Discrete-Choice Models of Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 242-262, Summer.
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    Cited by:

    1. Philippe Choné & Franck Evain & Lionel Wilner & Engin Yilmaz, 2013. "Introducing Activity-Based Payment in the Hospital Industry: Evidence from French Data," CESifo Working Paper Series 4304, CESifo Group Munich.
    2. Philippe Choné & Franck Evain & Lionel Wilner & Engin Yilmaz, 2013. "Introducing Activity-Based Payment in the Hospital Industry: Evidence from French Data," CESifo Working Paper Series 4304, CESifo Group Munich.
    3. Gautam Gowrisankaran & Claudio Lucarelli & Philip Schmidt-Dengler & Robert Town, 2013. "Can Amputation Save the Hospital? The Impact of the Medicare Rural Flexibility Program on Demand and Welfare," NBER Working Papers 18894, National Bureau of Economic Research, Inc.

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