The standard mechanism for Medicare payment for hospital services is the Prospective Payment System, but four specific hospital classifications, each with different payment enhancements and qualification criteria, are available to hospitals that serve rural communities [sole community hospital (SCH), Medicare-dependent hospital (MDH), rural referral center (RRC), and critical access hospital (CAH)]. While the benefits of conversion to CAH status have led to calls for expansion of cost-based reimbursement to other groups of rural hospitals that are purported to be under financial pressure, there has been no systematic analysis of the financial performance and condition of non-CAH rural hospitals. Using a set of standard financial ratios, this study will compare rural-urban hospital financial performance by Medicare reimbursement classification over a recent three-year period. The goals are to determine the profitability, liquidity, and capital structure of SCHs, MDHs, RRCs, and CAHs compared to other rural hospitals and urban hospitals. Products from this research would include a final report, a focused Findings Brief, and an article for submission to a peer-reviewed journal.

Publications

• A Comparison of Rural Hospitals With Special Medicare Payment Provisions to Urban and Rural Hospitals Paid Under Prospective Payment (Final Report)
  North Carolina Rural Health Research and Policy Analysis Center
  Date: 08/2010
  This final report compares the financial performance and condition of rural hospitals with special Medicare payment provisions to urban and rural hospitals paid under prospective payment (UPPS and R-PPS hospitals, respectively). Nine ratios from the three most common categories of ratios used in financial statement analysis (profitability, liquidity, and capital structure) as well as four other ratios that are commonly used to evaluate rural hospital financial performance are assessed.
• A Financial Comparison of Rural Hospitals With Special Medicare Payment Provisions to Hospitals Paid Under Prospective Payment (Findings Brief)
  North Carolina Rural Health Research and Policy Analysis Center
  Date: 04/2010
  This brief compares the profitability of hospitals in the four classifications of rural hospitals that can qualify for special payment provisions under Medicare (critical access, Medicare-dependent, and sole community hospitals and rural referral centers) to urban and rural hospitals paid under prospective payment during a recent three-year period.
• Profitability of Rural Hospitals Paid Under Prospective Payment Compared to Rural Hospitals With Special Medicare Payment Provisions (Findings Brief)
  North Carolina Rural Health Research and Policy Analysis Center
  Date: 09/2010
  This study compares the profitability of urban/rural hospitals paid under PPS (U-PPS and R-PPS, respectively) to rural hospitals with special Medicare payment provisions between 2007 and 2009.