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Analyzing cost efficiency of Critical Access Hospitals

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  • Cristian Nedelea, I.
  • Matthew Fannin, J.

Abstract

The Critical Access Hospital (CAH) program has been created to protect small, financially vulnerable rural hospitals in the U.S. by granting them Medicare cost-based reimbursement. However, there have been concerns that this type of reimbursement might have a negative impact on the cost efficiency of hospitals that converted to CAH status. This study examines the impact of Medicare cost-based reimbursement, length of participation in the CAH program and other environmental variables on the cost efficiency of CAHs using a two-stage approach. In the first stage, data envelopment analysis is used to estimate cost efficiency of CAHs. In the second stage, cost efficiency is regressed on environmental variables using a parametric bootstrap of a truncated regression. The estimated results suggest that Medicare cost-based reimbursement may increase the cost inefficiency of CAHs and that longer participation in the CAH program increases hospital cost inefficiency but the extent of this inefficiency increase is lower than what previous literature showed.

Suggested Citation

  • Cristian Nedelea, I. & Matthew Fannin, J., 2013. "Analyzing cost efficiency of Critical Access Hospitals," Journal of Policy Modeling, Elsevier, vol. 35(1), pages 183-195.
    • Handle: RePEc:eee:jpolmo:v:35:y:2013:i:1:p:183-195
    DOI: 10.1016/j.jpolmod.2012.10.002
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    Cited by:

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    2. George Fragkiadakis & Michael Doumpos & Constantin Zopounidis & Christophe Germain, 2016. "Operational and economic efficiency analysis of public hospitals in Greece," Annals of Operations Research, Springer, vol. 247(2), pages 787-806, December.
    3. Chowdhury, Hedayet & Zelenyuk, Valentin, 2016. "Performance of hospital services in Ontario: DEA with truncated regression approach," Omega, Elsevier, vol. 63(C), pages 111-122.
    4. Pınar Kaya Samut & Reyhan Cafrı, 2016. "Analysis of the Efficiency Determinants of Health Systems in OECD Countries by DEA and Panel Tobit," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 129(1), pages 113-132, October.
    5. Dinesh R. Pai & Fatma Pakdil & Nasibeh Azadeh-Fard, 2024. "Applications of data envelopment analysis in acute care hospitals: a systematic literature review, 1984–2022," Health Care Management Science, Springer, vol. 27(2), pages 284-312, June.
    6. Qian Liu & Bo Li & Muhammad Mohiuddin, 2018. "Prediction and Decomposition of Efficiency Differences in Chinese Provincial Community Health Services," IJERPH, MDPI, vol. 15(10), pages 1-14, October.
    7. George Fragkiadakis & Michael Doumpos & Constantin Zopounidis & Christophe Germain, 2016. "Operational and economic efficiency analysis of public hospitals in Greece," Post-Print hal-01414677, HAL.
    8. Simar, Léopold & Wilson, Paul W., 2020. "Technical, allocative and overall efficiency: Estimation and inference," European Journal of Operational Research, Elsevier, vol. 282(3), pages 1164-1176.
    9. Gupta, Maansi & Bolia, Nomesh B., 2020. "Efficiency measurement of Indian high courts using DEA: A policy perspective," Journal of Policy Modeling, Elsevier, vol. 42(6), pages 1372-1393.
    10. Deng, Guangwei & Pan, Yongbin & Feng, Chenpeng & Liang, Liang, 2024. "The efficiency of residency training and health outcomes in China: Based on two-stage DEA and cluster analysis," Socio-Economic Planning Sciences, Elsevier, vol. 96(C).
    11. Gökçe Manavgat & Martine Audibert, 2024. "Healthcare system efficiency and drivers: Re-evaluation of OECD countries for COVID-19," Post-Print hal-04350906, HAL.

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    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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