Munificent environments, management control, and the cost of rural hospital care.

Rural hospitals have been threatened by declining revenues. Control over costs will be necessary to help these hospitals survive. Investigation of the determinants of hospital costs in Iowa reveals that costs are primarily caused by environmental factors, rather than variables over which managers have control. Furthermore, efforts by policy makers to improve hospital efficiency by stimulating competition among hospitals may have been ineffective, since the level of competition was not found to be associated with hospital production costs.