NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Publications by Philip Schmidt-Dengler

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March 2013Can Amputation Save the Hospital? The Impact of the Medicare Rural Flexibility Program on Demand and Welfare
with Gautam Gowrisankaran, Claudio Lucarelli, Robert Town: w18894
This paper seeks to understand the impact of the Medicare Rural Hospital Flexibility (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. A hospital that converted to CAH status would see its inpatient admissions drop 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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