The Effect of the Prospective Payment System on Rural Health Care

Medicare’s diagnosis related group based prospective payment system (DRG‐PPS) enables accounting to have a penetrating and significant influence on health care services delivery. In order to appreciate the implications of accounting’s privileged position, it is necessary to go beyond accounting technique, expanding the sphere of inquiry to encompass the socio political conditions. The DRG‐PPS is located within an evolutionary framework of social development in order to investigate the colonization of the health care discourse by the prevailing managerialist rhetoric. The influence of the managerialist policy and policy setting is explored and the actual operational consequences on a set of rural hospitals are presented The empirical analysis suggests that the rural health care sector is strongly influenced by the policy operationalized in the form of the DRG‐PPS. These steering mechanisms are constructing the reality of the rural hospitals and as such are colonizing the local systems. The hospitals’ adminis‐trative skills and structure relative to the prevailing managerialist criteria have been enhanced. However, one is hard put to conclude that these enhancements translate into improved accessibility of health care to rural constituents or enhanced fiscal viability of the rural hospitals.