Impact of CAH Participation in Flex Financial and Operations Improvement Activities on Hospital Financial Indicators

Publication Date: Apr 2020
Author(s): CAH Financial Indicators Team
Research Center(s): North Carolina
Project: Analyzing Financial and Operational Performance of CAHs
Topic(s): Finance

Under the Medicare Rural Hospital Flexibility (Flex) Program, states with Critical Access Hospitals (CAHs) are eligible to receive federal funds to support hospital improvement. This study finds:

• Compared to CAHs with no participation, CAHs with two years of participation and three years of participation showed increases in total margin of 1.60 and 3.95 percentage points, respectively.
• Compared to CAHs with no participation, CAHs with three years of participation showed a 3.16 percentage point increase in operating margin.
• We found no evidence that one year of participation improved profitability indicators, suggesting that continued participation may be necessary to see changes in financial indicators.
• Because interventions were not randomly assigned, we were unable to determine whether there was a causal relationship between participation and financial performance. Results were sensitive to model specification and should be interpreted with caution.