Explores how predictions of changes in hospital financial performance as a result of change in Medicare payment differ when comparing results using data from the Medicare Cost Report (MCR) to results using data from the audited hospital financial statement (FS). Results indicate that when policy analysts and policymakers examine the effect of payment policies on hospitals' financial performance (e.g., total margin) using the best available national data (the MCR) rather than FS data, the results are likely to be valid, despite previously reported discrepancies in the financial information between the two data sources Using statistical analysis of MCR data as a basis for decisions is, therefore, valid for hospitals as a whole. However, using MCR data to directly track the financial performance of individual hospitals may not be valid. This analysis does not, therefore, support using only MCR data for particular hospitals when FS data are available. In those situations, the findings would support using both data sources because of the potential disagreements between the financial data in the MCR and the FS.