The Financial and Community Experience of Sole Community Hospitals in Comparison to Other Rural Hospitals

The standard mechanism for Medicare payment for hospital services is the Prospective Payment System (PPS), but a hospital classification available to hospitals that maintain health services in isolated areas is the Sole Community Hospital (SCH). Sole Community Hospitals predate PPS when certain hospitals were granted exemptions from cost limits prior to 1983. Effective in 1990, additional hospitals qualified as SCHs through meeting certain isolation, weather and travel condition criteria. Once designated as a SCH, there is no need to apply for re-approval.

This research will investigate the financial and community experience of SCHs in comparison with other rural hospitals. The availability of alternative facilities, and the socioeconomic and demographic characteristics of SCH service areas will be compared to other rural hospital service areas.

Analysis of the financial experience will include comparison of the long-term profitability of SCHs to other rural hospitals, estimation of the potential profitability consequences of eliminating the payment classification altogether, and estimation of the potential consequences of maintaining the payment classification but failing to update the base year from which costs are trended forward.

Project data will come from the hospital market service area file, the hospital Cost Report information system, the area health resource file, and census data.

There may be products related to this project; please contact the lead researcher for more information.