Early impacts of the Pennsylvania Rural Health Model on potentially avoidable utilization

Abstract

The Pennsylvania Rural Health Model (PARHM) is a novel alternative payment model for rural hospitals that aims to test whether hospital-based global budgets, coupled with delivery transformation plans, improves the quality of health care and health outcomes in rural communities. Eighteen hospitals joined PARHM in three cohorts between 2019 and 2021. This study assessed PARHM’s impact on changes in potentially avoidable utilization (PAUs)—a measure of admission rates policymakers explicitly targeted for improvement in PARHM. Using a difference-in-differences analysis and all-payer hospital discharge data for Pennsylvania hospitals from 2016-2022, we found no significant overall reduction in community-level PAU rates up to four years post-PARHM implementation, relative to changes in rural Pennsylvania communities whose hospitals did not join PARHM. However, heterogeneous treatment effects were observed across cohorts that joined PARHM in different years, and between critical access vs. prospective payment system hospitals. These findings offer insight into how alternative payment models in rural health care settings may have heterogeneous impacts based on contextual factors and highlight the importance of accounting for these factors in proposed expansions of alternative payment models for rural health systems.