The improving efficiency of critical access hospitals

: Critical access hospitals (CAHs) play an important role in providing health services in rural communities.

: Communities in rural America tend to be older, less affluent, and underinsured and have poorer health status. Unfortunately, residents in rural areas see physicians less frequently and often later in the course of an illness. This is due to reduced access to health care, economic factors, cultural and social differences, less education, lack of insurance, and the isolation of living in remote areas. Our research shows that the CAH program is an efficient way to help rural communities meet their health care needs.

: This study analyzes the efficiency of CAHs using a variable returns to scale, input-oriented data envelopment analysis model to identify the "efficiency frontier" of rural health care. Data for 997 CAHs in 2005 and 957 in 2006 were analyzed using data envelopment analysis to measure hospital efficiency.

: Our analysis indicates overall efficiency in CAHs improved from 60% in 2005 to 66% in 2006. At the macroeconomic level, this is important because it indicates that value associated with expenditures in rural health care is increasing.

: The study has policy implications as the federal government attempts to realign scarce health care resources to better meet local community needs. In addition, hospital executives, health care policymakers, taxpayers, and other stakeholders benefit from studies that improve the delivery of health care in rural America.