| The rapidly changing health care marketplace poses dramatic challenges for rural communities and the local provision of hospital services. Patient outmigration to urban areas for care represents one such challenge for rural hospitals. Issues of geographic access to hospital services also arise, particularly in rural areas affected by hospital closures, mergers and consolidations. However, despite the importance of these issues, little empirical economic research concerning these issues exists.;This research concerns two aspects of rural residents' demand for hospital services. First, what role do economic variables play in the outmigration of rural residents for hospital services? Is the outmigration of rural residents for hospital care explained simply by the severity of illness and the extent of services provided in the local community? Or, do differences in access to alternative hospitals, in the form of income, insurance holdings, travel costs, and hospital attributes affect the choice of hospital by rural residents? Second, is the utilization of hospital services significantly influenced by differences in geographic access?;To answer these questions, this study develops a combined count/discrete choice model of the rural resident's demand for hospital services. The count portion of the model estimates the annual frequency of inpatient hospitalizations for the sample of rural residents. The discrete choice portion of the model estimates the probability that, conditional upon the use of inpatient hospital services, a rural resident will choose a particular hospital. Using a time-price model of the demand for hospital services, with empirical observations on the decisions of rural residents to travel to alternate hospitals, we infer the value of hospital services delivered in a rural community.;The analysis shows that along with travel cost, age, illness severity, and hospital attributes, income plays a significant role in explaining the observed hospital choices of rural residents. Wealthier residents outmigrate with greater probability, after controlling for illness complexity, age, sex, travel cost, and hospital facility attributes, than do poorer residents. With respect to the demand for a number of inpatient hospitalizations in a year, the analysis reveals that declines in geographic access do not necessarily lead to lower levels of utilization. |
