Linkages in the rural continuum: the balanced budget act and beyond

This study examined how rural hospitals altered their postacute and long-term care strategies after the Balanced Budget Act of 1997 (BBA97).

A nationally representative sample of 540 rural hospital discharge planners were interviewed in 1997. In the year 2000, 513 of 540 discharge planners were reinterviewed. The study is a descriptive analysis of how rural hospitals formed new and altered existing organizational strategies during a time of turbulent changes in federal government reimbursement policy. We classify rural hospital strategic behavior in 1997 according to the Miles and Snow typology of Prospectors, Analyzers, Defenders, and Reactors, and then we examine how the various hospital types altered key strategies following BBA97.

Between 1997 and 2000, more than 26% of sampled rural hospitals that did not participate in the swing-bed program in 1997 (44/167) had chosen to do so in 2000, whereas only 3% of those using swing beds in 1997 had eliminated them (12/346). Other strategies such as divestiture of hospital-based nursing homes were related to concurrent swing-bed adoption. Rural hospitals also increased their reliance on formal linkages with external providers of long-term care.

After the BBA97 reimbursement changes, rural hospitals increased their reliance on swing beds and formal linkages to external providers. We observed changes in overall strategy types, away from the Defender and toward the Prospector and Analyzer strategy types. Our findings illustrate the importance of swing beds as a critical buffer for rural hospitals challenged by the uncertainty of the post-BBA97 environment.