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Factors Contributing to Unit Cost Instability in the Low-Volume Hospital
This project will study year-to-year variation in Medicare inpatient costs within rural hospitals, with a special focus on factors affecting unit costs in low-volume providers. We propose to analyze panel data constructed from eight years of Medicare hospital files, covering reports filed for all general, short-stay facilities with fiscal years beginning between October 1989 through September 1998. We believe that the proposed longitudinal study design could offer substantial improvement in our understanding of the rural hospital cost factions, which will help to evaluate the many options for payment relief and to target the most appropriate PPS reforms to the most appropriate rural providers.
Publications
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Unpredictable Demand and Low-Volume Hospitals
Author(s): Kathleen Dalton, Mark Holmes, Rebecca Slifkin
Report Number: Findings Brief 75
Date: 01 / 2003
This Findings Brief assesses the degree to which the annual number of patient discharges varies from year to year for low volume hospitals. The study finds that low volume hospitals face more instability from year to year in demand for inpatient services than larger hospitals. Also, the average variability over time for the smallest hospitals, defined as less than 500 or fewer discharges a year, is nearly 60% higher than the average for all hospitals. Finally, the study concluded that even though low volume, rather than rurality, is the important factor, hospitals in extremely rural counties must contend with more fluctuation than other hospitals, primarily because they tend to be smaller.
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Unstable Demand and Cost per Case in Low-Volume Hospitals
Author(s): Kathleen Dalton, Mark Holmes, Rebecca Slifkin
Report Number: Findings Brief 76
Date: 01 / 2003
This Findings Brief looks at the effects of year-to-year changes in annual inpatient discharges on costs per Medicare discharge. The analysis finds that small hospital costs are more vulnerable to change than larger hospital costs. As a result, average costs per discharge are less stable, making it difficult for these facilities to predict and manage profitability under fixed payment schemes. The study finds that among the lowest volume hospitals, there is a 10% decrease in discharges with every 3% increase in the cost per Medicare case. In addition, the study found that hospitals allowed to use swing-beds for long-term care patients are not less sensitive to volume fluctuations.
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