Changes in hospital service mix and cost allocations in response to changes in Medicare reimbursement schemes

Leslie Eldenburg, Sanjay Kallapur

Research output: Contribution to journalArticle

64 Scopus citations

Abstract

After 1983, Medicare paid hospitals for inpatient services at fixed rates, but continued to reimburse outpatient services based on reported cost. Using data from Washington State we find that hospitals responded by increasing outpatient services to Medicare patients compared to non-Medicare patients-the ratio of Medicare outpatient revenues as a percentage of total Medicare revenues increased after 1983 to a significantly greater extent than for non-Medicare patients. We also find that allocations of overhead costs to outpatient departments increased after 1983. These findings suggest that hospitals change their patient mix and cost allocations to maximize hospital cash flows.

Original languageEnglish (US)
Pages (from-to)31-51
Number of pages21
JournalJournal of Accounting and Economics
Volume23
Issue number1
DOIs
StatePublished - May 1997

Keywords

  • Cost allocation
  • Patient mix
  • Reimbursement schemes

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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