Our study sample includes non federal, short-term, acute care hospitals that were in operation in Virginia from 1998 to 2004. We excluded two major safety net hospitals from our sampling frame because their organizational characteristics are very distinct from other hospitals. Specifically, these two large academic medical centers, the University of Virginia Health System and the VCU Health System, treat substantial numbers of uninsured patients, and the state government directs most Medicaid
Disproportionate Share Hospital payments to them to offset the costs of uncompensated care. We also restricted our study sample in the following ways. First, we retained only those hospitals that had fiscal reporting periods of 300 or more days in the financial data so that key financial variables are measured consistently across hospitals. Second, we included only hospitals that could be matched
across the major databases used in the study. Finally, hospitals were included that had complete data on all key study variables. Overall, there were only 1.4% of observations over the study years that were excluded because of missing data. In total, there were between 70 and 74 hospitals operating in each study year. Over the 7 year study period, there were a total of 501 hospital year observations in our unbalanced panel.