Policy Analysis Using the Financial Distress Model: Does Medicaid Expansion Affect the Risk of Hospital Financial Distress and Closure?

Lead researcher:
Project funded:
September 2015
Project completed:
August 2016

The NC RHRC has recently developed a model to predict financial distress in rural hospitals. This study will demonstrate the use of this model to analyze policies affecting rural hospitals. In particular, the purpose of this study is to determine:

1) Are there relatively more hospitals at medium-high and high risk of financial distress in states that have decided not to expand Medicaid?

2) Are there relatively more closed hospitals in states that have decided not to expand Medicaid, controlling for secular trends?

This study will build on the 2014-15 approved project entitled "Can a Model Predict Financial Distress among Rural Hospitals?" The newly developed model uses current financial performance and market characteristic data to assign rural hospitals to one of four categories of risk of financial distress. The study will use Medicare Cost Report data for 2014, if available. Otherwise, simulation will be used to estimate the effects on financial distress.