Has the Pennsylvania Rural Health Model alleviated the financial vulnerability of rural hospitals?

Abstract

Background: The Pennsylvania Rural Health Model (PARHM) was launched in 2019 to increase access to high-quality care, improve hospitals' financial stability, and better serve their communities by transitioning to value-based care.

Purpose: We examine the impact of participating in PARHM on hospitals' financial performance using agency theory as the theoretical foundation.

Methods: We analyzed retrospective data from 65 eligible acute care hospitals in rural Pennsylvania, spanning 2015-2022. Complete data sets were available for 61 hospitals from 2015 to 2020 and 57 hospitals from 2021 to 2022, totaling 480 hospital-year observations. We employed both traditional two-way fixed effects difference-in-differences and Callaway and Sant'Anna's difference-in-differences approach with multiple intervention periods for our analysis.

Results: Our findings indicate that PARHM was associated with improved financial outcomes for the participating hospitals, although these improvements were not statistically significant across the board. Statistical significance was observed only when comparing early participants (who joined in 2019) with late participants.

Conclusions: While PARHM has been associated with some financial improvements in the participating hospitals, overall enhancements cannot be conclusively determined due to confounding factors such as pandemic-related aid. Further research is necessary to evaluate the long-term sustainability and effectiveness of PARHM as more data become available.

Practice implications: Advocacy and additional state and federal policymaking are required to address the persistent equity issues in rural health care, increase funding for robust and adaptable health care infrastructure, and expand on current models and policies that have worked well for rural providers.