Alternative Methods for Defining Rural Hospital Service Area Market

For decades, the health services research community has relied on the Centers for Medicare & Medicaid Services (CMS) Hospital Service Area File (HSAF) to construct hospital market files and to use in other analyses. The HSAF is a dataset that contains aggregate beneficiary information based on annual Medicare inpatient fee-for-service (FFS) claims data, including the number of discharges, total days of care, and total charges matched to hospital provider number and the ZIP code of the Medicare beneficiary. Despite the limitations of using HSAF to create hospital market files (e.g., Medicare FFS only, no beneficiary-level info), it has been widely used for several reasons, but mostly due to the widespread availability of this file. We used HSAF to construct hospital markets used in our Financial Distress Index (FDI) and many other research projects. However, CMS has been expanding its data suppression policy – "The policy stipulates that no cell (e.g., admissions, discharges, patients, services, etc.) containing a value of 1 to 10 can be reported directly." – meaning the HSAF is not very useful for rural applications.

To overcome these limitations and create a better hospital market file, we planned to develop new market definitions. This study provided better understanding of the communities served by rural hospitals and allowed better modeling of FDI and other research topics explicitly considering community effects. Improving the methods for creating the hospital market file also has downstream impacts on much of our other research.

Publications

• A New Model-based Approach for Estimating Rural Hospital Markets
  Journal Article
  North Carolina Rural Health Research and Policy Analysis Center
  Date: 01/2025
  Researchers developed a new method for defining rural hospital markets that uses publicly available data with models of patient care-seeking behavior. This approach identifies the ZIP codes estimated to provide a majority of patient volume to a particular hospital. Findings can be used to examine key market characteristics of rural hospitals.