Vortrag, Österreichisches Institut für Wirtschaftsforschung, Wien, 13.05.2013
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.