Home health agencies' costs in the PPS era
The home health industry is dominated by for-profit agencies (90%), which tend to be newer than the non-profit agencies, with most receiving Medicare certification after PPS implementation in 2000. For-profit agencies tend to have smaller scale operations (261 vs. 902 median unduplicated patients per year respectively) and different cost structures, and are less likely to be affiliated with chains (21% vs. 40%). Our estimates suggest diseconomies of scale (p=0.03), a negative marginal cost for contracting with therapy workers (p<0.05), but a positive marginal cost for contracting with skilled nursing (p<0.05).
These findings suggest that efficiencies might be achieved by promoting non-profit, smaller agencies with more contract therapy and more salaried skilled nursing. This conclusion should be tested in future studies, including measures of quality in the cost function as well, as CMS continues with policies to contain costs.
Learning Areas:Public health or related public policy
Discuss issues related to home health cost structure and efficiency
Keyword(s): Cost Issues, Home Care
Qualified on the content I am responsible for because: I am a professor at the University of California, Irvine and an expert in health services research and have conducted extensive research in long-term care utilization and costs.
Any relevant financial relationships? No
I agree to comply with the American Public Health Association Conflict of Interest and Commercial Support Guidelines, and to disclose to the participants any off-label or experimental uses of a commercial product or service discussed in my presentation.