Contrary To Popular Belief, Medicaid Hospital Admissions Are Often Profitable Because Of Additional Medicare Payments.

It is generally believed that most hospitals lose money on Medicaid admissions. The data suggest otherwise. Medicaid admissions are often profitable for hospitals because of payments from both the Medicaid program and the Medicare program, including payments for uncompensated care and from the Medicare disproportionate-share hospital program.

Rural and urban Medicare beneficiaries use remarkably similar amounts of health care services.

Medicare payment policies for rural health care providers are influenced by the assumption that the limited supply of physicians in rural areas causes rural Medicare beneficiaries to receive fewer health care services than their urban counterparts do. This assumption has contributed to the growth in special payments to rural providers. As a result, Medicare pays rural providers $3 billion more each year in special payments than they would receive under traditional payment rates.

Private-payer profits can induce negative Medicare margins.

A common assumption is that hospitals have little control over their costs and must charge high rates to private health insurers when Medicare rates are lower than hospital costs. We present evidence that contradicts that common assumption. Hospitals with strong market power and higher private-payer and other revenues appear to have less pressure to constrain their costs.

Getting the price right: Medicare payment rates for cardiovascular services.

Specialized, physician-owned cardiac hospitals have grown rapidly. Physicians have also expanded their capability to provide cardiovascular diagnostic services in their offices. In this paper we consider evidence of errors in Medicare's prices for hospital care and physician services and discuss ways to improve the accuracy of those prices.

Do physician-owned cardiac hospitals increase utilization?

This paper looks at whether physicians' investment in heart hospitals during 1997-2001 was followed by an increase in the number of relatively profitable cardiac surgeries paid for by Medicare or in a shift toward operating on healthier (more profitable) Medicare patients. Although markets with physician-owned hospitals had slightly above-average growth rates in profitable cardiac surgeries during this period, the magnitude of the increase was small and statistically significant only for bypass surgery. There was no increase in the proportion of surgeries performed on healthier patients.

Promoting accountability: hospital charity care in California, Washington state, and Texas.

Debate as to whether private hospitals meet their charitable obligations is heated. This study examines how alternative state approaches for ensuring hospital accountability to the community affects charitable expenditures and potentially affects access to care for the uninsured. Descriptive and multivariate analyses were used to compare private California hospitals' charity care expenditures with those of hospitals in Texas and Washington state.

Understanding rural hospital bypass behavior.

Context: Though many rural hospitals offer a broad array of services, local residents may choose more distant facilities for inpatient care services. Depending on the extent of the bypass phenomenon, hospitals may experience financial distress, reduced service offerings, or closure.

Purpose: This study provides a descriptive analysis of rural hospital bypass behavior in 7 states.

Future financial viability of rural hospitals.

Policymakers are concerned that some rural hospitals have suffered significant losses under the Balanced Budget Act (BBA) of 1997 and that access to inpatient and emergency care may be at risk. This article projects that the median total profit margin for rural hospitals will fall from 4 percent in 1997 to between 2.5 and 3.

Successful physician-hospital integration in rural areas.

Objectives: During the 1990s hospitals competed to acquire physician practices. Those competitive bidding wars could have pushed the price of practices beyond the value obtained by gaining influence over physicians. This paper examines how hospital location and competition for physician practices affects the profitability of physician-hospital integration in rural areas.

Achieving equity in Medicare disproportionate share payments to rural hospitals: an assessment of the financial impact of recent and proposed changes to the disproportionate share hospital payment formula.

Historically, the Medicare Disproportionate Share Hospital (DSH) payment program has been less favorable to rural hospitals: eligibility thresholds were higher and the payment adjustment was smaller for rural than for urban hospitals. Although the Medicare, Medicaid, and SCHIP Benefit Improvement and Protection Act (BIPA) of 2000 established a uniform low-income threshold and increased the magnitude of the adjustment for certain small and rural hospitals as a means to promote payment equity, the DSH distribution formula continues to vary by location. This study examines how the DSH revisions mandated under BIPA are likely to affect rural hospitals' financial performance and simulates the financial impact of implementing a uniform DSH payment adjustment.

Rural hospitals: trends, challenges, and a future research and policy analysis agenda.

Previous reviews of the status of rural hospitals conclude that rural hospitals play a major role in ensuring the provision of health services in rural areas, are an essential part of the social and economic identity of rural communities, have had mixed success in their ability to respond to environmental threats, and are very sensitive to public policies due, in part, to their small size. The evolving hospital paradigm in the United States and a turbulent economic and health care environment have created an uncertain future for the rural hospital. Hospitals are being forced to shift their emphasis from filling acute inpatient care beds to providing a more diversified set of services through linkages with other institutions and provider groups.

Why do rural primary care physicians sell their practices?

This study evaluates why rural primary care physicians sell their practices. A random sample of rural primary care practices in California, Utah, Ohio, Texas, and Virginia were surveyed to investigate changes in ownership of the practices during the period 1995-1998. These five states were selected because they represent areas with different experiences with physician-hospital integration and varied rates of managed care penetration.

The variance of rural small-town hospitals' financial performance.

The profitability of rural small-town hospitals varies widely. Some are consistently profitable; others generate significant losses. This Policy Brief provides insights into why some rural small-town hospitals are financially successful and others struggle with persistent financial difficulties.