The Financial Viability of Rural Hospitals in a Post-BBA Environment. UMN RHRC Working Paper #33.

Publication Date: October 1st, 2000
Publication Type(s): Working Paper
Topic(s): , ,
Author(s): Stenslad, J., Moscovice, I., Christianson, J.

This paper evaluates the financial viability of rural hospitals under BBA and BBRA Medicare payment policies. To evaluate financial viability, we first project rural hospitals’ profit margins for the years 1998 through 2004. The BBA will be fully implemented by 2004. Margins are projected using a simulation model that adjusts each hospital’s historical profit margin for projected changes in hospital productivity and Medicare payments. The simulation model does not formally model potential changes in the profitability of non-Medicare patients. In contrast with most simulations of the BBA, this paper also projects behavioral changes. We estimate the number of hospitals that will become Critical Access Hospitals (CAHs) and estimate the number of beds at each hospital. These projections are important because under the BBA and BBRA, Medicare payments will depend on the choices hospital boards make with respect to staffed beds and Critical Access Hospital status.

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