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Are Critical Access Hospitals Less Efficient than Non-Converting, Prospectively Paid Rural Hospitals?

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  • Nedelea, I. Cristian
  • Fannin, James Matthew

Abstract

This study examined differences in technical efficiency between two groups of rural hospitals operating under different Medicare reimbursement systems: cost-based reimbursed Critical Access Hospitals (CAHs) and non-converting, prospectively paid (PPS) rural hospitals. To control for hospital size, two different groups of PPS rural hospitals were specified based on bed size. We use a two-stage approach, where data envelopment analysis (DEA) is used in the first stage to estimate technical efficiency. In the second stage, we estimate the effects of environmental variables (CAH status, ownership, Medicare and Medicaid) on hospital efficiency using a truncated regression with bootstrap. Density analysis of efficiency scores suggests that CAHs are more technically efficient than both groups of non-converting, PPS rural hospitals. Similarly, the results of bootstrapped truncated regression showed a positive and significant marginal effect of CAH status suggesting that CAHs are more technically efficient than non-converting, PPS rural hospitals.

Suggested Citation

  • Nedelea, I. Cristian & Fannin, James Matthew, 2012. "Are Critical Access Hospitals Less Efficient than Non-Converting, Prospectively Paid Rural Hospitals?," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124670, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea12:124670
    DOI: 10.22004/ag.econ.124670
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    References listed on IDEAS

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    1. Simar, Leopold & Wilson, Paul W., 2007. "Estimation and inference in two-stage, semi-parametric models of production processes," Journal of Econometrics, Elsevier, vol. 136(1), pages 31-64, January.
    2. Leopold Simar & Valentin Zelenyuk, 2006. "On Testing Equality of Distributions of Technical Efficiency Scores," Econometric Reviews, Taylor & Francis Journals, vol. 25(4), pages 497-522.
    3. Kneip, Alois & Park, Byeong U. & Simar, Léopold, 1998. "A Note On The Convergence Of Nonparametric Dea Estimators For Production Efficiency Scores," Econometric Theory, Cambridge University Press, vol. 14(6), pages 783-793, December.
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    Keywords

    Community/Rural/Urban Development; Health Economics and Policy;

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