Vortrag, Österreichisches Institut für Wirtschaftsforschung, Wien, 12.01.1998–20.11.2019
Commentary: Dieter Pennerstorfer (WIFO)
This paper seeks to understand the impact of the Medicare Rural Hospital Flexibility (Flex) Program on rural resident hospital
choice and welfare. The Flex program created a new class of hospital, the Critical Access Hospital (CAH), which receives more
generous reimbursement in return for limits on capacity and length of stay. A hospital that converted to CAH status would
see its inpatient admissions drop by a mean of 5.4 percent, of which almost all was driven by factors other than capacity.
The program increased consumer welfare if it reduced the closure rate by at least 4 percentage points.