For Rural Hospitals That Merged, Inpatient Charges Decreased and Outpatient Charges Increased: A Pre‐/Post‐Comparison of Rural Hospitals That Merged and Rural Hospitals That Did Not Merge Between 2005 and 2015

Abstract

Purpose To determine whether inpatient and outpatient charges changed at rural hospitals after a merger. Methods Hospital mergers were derived from proprietary Irving Levin Associates data through manual review and validation. Hospital‐level characteristics were derived from HCRIS, CMS Impact File Hospital Inpatient Prospective Payment System, Hospital MSA file, AHRF, and US Census data. A difference‐in‐differences approach was used to determine whether inpatient and outpatient charges changed at rural hospitals after a merger. The comparison group, rural hospitals that did not merge at any point during the sample period, was weighted using inverse probability of treatment weights. Key outcome measures were total inpatient and total outpatient charges (logged). Findings Hospitals that merged billed 17.73% more inpatient charges and 12.66% more outpatient charges at baseline compared to hospitals that did not merge. Our results indicate that merging was associated with a 3.04% decrease in inpatient charges (P < .001) and a 1.07% increase in outpatient charges (P = .082). Merging was also associated with a 4.38% decrease in total revenue, a 3.58% decrease in net patient revenue, and no change in total inpatient discharges or average daily census. Conclusions & Implications Merging was strongly associated with a decrease in inpatient charges and somewhat associated with an increase in outpatient charges for rural hospitals. Future work could build upon this work to determine whether acquirers reduce or eliminate certain services at rural hospitals after a merger, and ultimately how changes in service delivery could impact patients in those rural communities.

Perceptions of access to care after a rural hospital closure in an economically distressed county of Appalachian Tennessee

“…35 However, state and federal policies can prevent the establishment and sustainability of FEDs, such as Certificate of Need laws 36 and Centers for Medicare & Medicaid Services (CMS) reimbursement policies. 37 The Rural Emergency Hospital (REH) designation is another strategy to help maintain access to emergency care within rural communities. This designation helps struggling rural hospitals address financial challenges by providing additional funding and reimbursement opportunities for emergency services.…”

Place and Population Matter in General Surgeon Location and Practice Structure

“…Rural places have generally been left behind by these trends, with their hospitals often closing if not merging and transforming into a different form of organization. 3 Perhaps more importantly, as Tsai et al 1 point out, the organization of general surgical practice has changed as practices have merged into larger and larger structures-another factor that can have implications for the viability of rural hospitals. 4 The use of HRRs for studying medical care delivery markets is seen as almost a criterion standard for the analysis of competition, but the HRRs from the Dartmouth Atlas of Health Care used by Tsai et al 1 and elsewhere in the literature reflect market structures of 2008 and earlier and have other inherent characteristics that may call for caution in interpreting data and trends based on them.…”

“…Rural places have generally been left behind by these trends, with their hospitals often closing if not merging and transforming into a different form of organization . Perhaps more importantly, as Tsai et al point out, the organization of general surgical practice has changed as practices have merged into larger and larger structures—another factor that can have implications for the viability of rural hospitals …”