Journal article
Policy implications of fixed-to-total-cost ratio variation across rural and urban hospitals
The Journal of rural health, Vol.39(4), pp.737-745
Autumn 2023
DOI: 10.1111/jrh.12767
PMID: 37203592
Abstract
Hospitals with lower fixed-to-total-cost ratios may be better positioned to remain financially viable when reducing service volumes required by many value-based payment systems. We assessed whether hospitals in rural areas have higher fixed-to-total-cost ratios, which would tend to create a systematic disadvantage in such an environment.
Our observational study used a mixed-effects, repeated-measures model to analyze Medicare Hospital Cost Report Information System data for 2011-2020. We included all 4,953 nonfederal, short-term acute hospitals in the United States that are present in these years. After estimating the relationship between volume (measured in adjusted patient days) and patient-care costs in a model that controlled for a small number of hospital characteristics, we calculated fixed-to-total-cost ratios based on our model's estimates.
We found that nonmetropolitan hospitals tend to have higher average fixed-to-total-cost ratios (0.85-0.95) than metropolitan hospitals (0.73-0.78). Moreover, the degree of rurality matters; hospitals in micropolitan counties have lower ratios (0.85-0.87) than hospitals in noncore counties (0.91-0.95). While the Critical Access Hospital (CAH) designation is associated with higher average fixed-to-total-cost ratios, high fixed-to-total-cost ratios are not exclusive to CAHs.
Overall, these results suggest that hospital payment policy and payment model development should consider hospital fixed-to-total-cost ratios particularly in settings where economies of scale are unattainable, and where the hospital provides a sense of security to the community it serves.
Details
- Title: Subtitle
- Policy implications of fixed-to-total-cost ratio variation across rural and urban hospitals
- Creators
- Abigail R Barker - Washington University in St. LouisA Clinton MacKinney - University of IowaTimothy D McBride - Washington University in St. Louis
- Resource Type
- Journal article
- Publication Details
- The Journal of rural health, Vol.39(4), pp.737-745
- DOI
- 10.1111/jrh.12767
- PMID
- 37203592
- NLM abbreviation
- J Rural Health
- eISSN
- 1748-0361
- Grant note
- U1CRH20419 / Federal Office of Rural Health Policy (FORHP)
- Language
- English
- Electronic publication date
- 05/19/2023
- Date published season
- Autumn 2023
- Date published
- 2023
- Academic Unit
- Health Management and Policy
- Record Identifier
- 9984413067002771
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