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

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.

Suggested Citation

  • Schmidt-Dengler, Philipp & Gowrisankaran, Gautam & Lucarelli, Claudio & Town, Robert, 2013. "Can Amputation Save the Hospital? The Impact of the Medicare Rural Flexibility Program on Demand and Welfare," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79920, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc13:79920
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    References listed on IDEAS

    as
    1. Small, Kenneth A & Rosen, Harvey S, 1981. "Applied Welfare Economics with Discrete Choice Models," Econometrica, Econometric Society, vol. 49(1), pages 105-130, January.
    2. 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.
    3. Paul E. McNamara, 1999. "Welfare Effects of Rural Hospitial Closures: A Nested Logit Analysis of the Demand for Rural Hospital Services," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(3), pages 686-691.
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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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