Urban and rural hospitals: how do they differ?

When the Health Care Financing Administration implemented the Medicare prospective payment system (PPS), the payment rates for inpatient hospital operating costs were derived on an urban and rural basis within each region. The rates were also adjusted for area wage levels and other factors affecting hospital costs. The effect of PPS on rural hospitals is of widespread interest. This article provides data on rural and urban hospital facilities, utilization, and charges, as of April 1985. Almost 48 percent of the 5,821 short stay hospitals included in the PPS recalibration file for Federal fiscal year 1984 are located in rural areas. Rural and urban areas are designated by the Executive Office of Management and Budget or, in some instances by regulation.