NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Can Amputation Save the Hospital? The Impact of the Medicare Rural Flexibility Program on Demand and Welfare

Gautam Gowrisankaran, Claudio Lucarelli, Philip Schmidt-Dengler, Robert Town

NBER Working Paper No. 18894
Issued in March 2013
NBER Program(s):   HC   IO

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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Document Object Identifier (DOI): 10.3386/w18894

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