Since our information for Medicare and Medicaid expenditures is for FY1998, we developed the financial indicators on a federal fiscal year basis using the Medicare cost reports that overlap at least some portion of the three federal fiscal years we are interested in. In those cases where the hospital's fiscal year does not coincide with the federal fiscal year, we calculated
the indicators for the federal fiscal year as a weighted average of values in the two cost reporting periods with portions occurring in the federal fiscal year. We used the proportion of the federal fiscal year occurring in each of the two cost reporting periods as our weights. For example, for a hypothetical hospital with cost reporting period starting on July 1 and ending on June 30, the FY1997 values would be calculated as ¾ of PPS-13 value (which corresponds to the period from October 1, 1996 to June 30, 1997) and ¼ of PPS-14 value (which corresponds to the period from July 1 1997 to September 30 1997). All periods were measured in days.
In about five percent of the cost reports, the reporting period is less than one full year. For some of those hospitals, there is a break in continuous coverage. In such cases, we used the data that are available and prorated it to a full year. Where no cost reporting information was available for a particular provider for either cost reporting period overlapping the federal fiscal year, the hospital was considered as missing for that year.
The analysis file covers all acute care hospitals (and does not include hospitals that are exempt from the Medicare prospective payment system). Table 5.2 shows the number of hospitals for which data were available and the number remaining after eliminating those with incomplete data or outlier values.