The effect of integration of hospitals and post-acute care providers on Medicare payment and patient outcomes

R. Tamara Konetzka, Elizabeth Stuart, Rachel M. Werner

Research output: Contribution to journalArticle

Abstract

In this paper we examine empirically the effect of integration on Medicare payment and rehospitalization. We use 2005–2013 data on Medicare beneficiaries receiving post-acute care (PAC) in the U.S. to examine integration between hospitals and the two most common post-acute care settings: skilled nursing facilities (SNFs) and home health agencies (HHA), using two measures of integration—formal vertical integration and informal integration representing preferential relationships between providers without formal relationships. Our identification strategy is twofold. First, we use longitudinal models with a fixed effect for each hospital-PAC pair in a market to test how changes in integration impact patient outcomes. Second, we use an instrumental variable approach to account for patient selection into integrated providers. We find that vertical integration between hospitals and SNFs increases Medicare payments and reduces rehospitalization rates. However, vertical integration between hospitals and HHAs has little effect, nor does informal integration between hospitals and either PAC setting.

Original languageEnglish (US)
JournalJournal of Health Economics
DOIs
StateAccepted/In press - Jan 1 2018

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Subacute Care
Medicare
Skilled Nursing Facilities
Home Care Agencies
Nursing Homes
Patient Selection

Keywords

  • Medicare
  • Post-acute care
  • Vertical integration

ASJC Scopus subject areas

  • Health Policy
  • Public Health, Environmental and Occupational Health

Cite this

The effect of integration of hospitals and post-acute care providers on Medicare payment and patient outcomes. / Konetzka, R. Tamara; Stuart, Elizabeth; Werner, Rachel M.

In: Journal of Health Economics, 01.01.2018.

Research output: Contribution to journalArticle

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