Hospital

Key facts

Medicare definition

Section 1861(e) of the Social Security Act

Federal standards

Hospital Conditions of Participation, 42 CFR Part 482

Licensed by

State health agencies

Survey oversight

State survey agencies or CMS-approved accrediting organizations

Main identifiers

CMS Certification Number (CCN) and National Provider Identifier (NPI)

What is a hospital?

In everyday use a hospital is any facility that admits patients for overnight care. In U.S. regulation the term is narrower. A state license authorizes an institution to operate as a hospital, and Medicare certification, which nearly all community hospitals hold, requires meeting the federal Conditions of Participation in 42 CFR Part 482.

Under Section 1861(e) of the Social Security Act, a Medicare hospital must be primarily engaged in providing inpatient diagnostic, therapeutic or rehabilitation services under the supervision of physicians. It must keep clinical records, have medical staff bylaws, provide 24-hour nursing service supervised by a registered nurse and maintain a utilization review plan.

Hospitals also deliver a large share of outpatient care through emergency departments, clinics and hospital outpatient departments, so a hospital is usually a campus of services rather than a building of beds.

How hospitals are classified

Medicare groups hospitals by the care they provide and the payment system that applies to them. The main categories are:

Ownership adds a second axis: nonprofit, for-profit (investor-owned) and government hospitals run by states, counties or cities. Federal hospitals, such as those of the Department of Veterans Affairs, operate outside state licensure and generally do not bill Medicare.

• Short-term acute care hospitals, paid under the Inpatient Prospective Payment System (IPPS).
• Critical Access Hospitals: small rural hospitals with no more than 25 inpatient beds, paid on a cost basis.
• Long-term care hospitals, inpatient rehabilitation facilities and psychiatric hospitals, each with its own Medicare payment system.
• Children's hospitals and certain cancer hospitals, which are excluded from the IPPS.
• Rural Emergency Hospitals, a Medicare provider type since 2023 that offers emergency and outpatient services but no inpatient stays.

Why hospital data matters

Hospitals are the anchor accounts in most healthcare market analysis:

• Hospitals sit at the center of referral networks, so mapping which physicians admit and refer to which hospital is central to pharma and device targeting.
• Medicare cost reports and Care Compare quality data are published per hospital and keyed to the CMS Certification Number.
• Payer network teams use hospital type, bed size and location to test network adequacy.
• Hospital type drives payment rules, so price, margin and length of stay comparisons are only valid between hospitals paid under the same system.

Hospital vs health system

Data sources often blur a hospital and its parent organization. A health system may own many hospitals that each hold their own license and CCN, while a single CCN can cover several campuses that bill as one hospital. Before counting hospitals, decide whether the unit of analysis is the license, the Medicare certification or the physical campus.