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Technical efficiency of Critical Access Hospitals: an application of the two-stage approach with double bootstrap
Iustin Cristian Nedelea1, James Matthew Fannin
1Department of Agricultural Economics and Agribusiness, Louisiana State University Agricultural Center, Baton Rouge, LA 70803, USA. inedel1@lsu.edu
Abstract:
The Critical Access Hospital (CAH) Program has offered Medicare cost-based reimbursement to small hospitals that meet certain eligibility criteria to improve their financial viability and quality of care. However, cost-based reimbursement has been associated with inefficiency in hospital operations. This study uses a two-stage approach and bootstrap procedures to examine the effects of environmental variables on the technical efficiency of CAHs. The two-stage approach with quality controls significantly improved statistical efficiency of parameter estimates in the second stage bootstrapped truncated regression relative to a similar model without quality controls. Overall, our results suggest that enhanced Medicare reimbursement may not have had detrimental effects on the technical efficiency of CAHs.
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