This study uses data from 1985-1991 to examine the financial impact of rural hospital decisions to change their PPS pay,ment status to become a Rural Referral Center (RRC), a Sole Community Hospital (SCH), or a Medicare Dependent Hospital (MDH). Selection of a special payment option was not found to affect overall hospital operating margins, current ratios, current asset turnover ratios, or revenue per discharge for these hospitals. In the case of hospitals choosing to be reimbursed as an MDH during the first year of the program, lengths of stay increased while revenue per patient day declined. These results suggest that some rural hospitals may respond to increased Medicare reimbursement under special payment options by changing the services they offer or their charges for other patients.
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