The Effect of Integration of Hospitals and Post-Acute Care Providers on Medicare Payment and Patient Outcomes

36 Pages Posted: 7 Jul 2016

See all articles by R. Tamara Konetzka

R. Tamara Konetzka

University of Chicago

Elizabeth A. Stuart

Johns Hopkins University - Bloomberg School of Public Health

Rachel M. Werner

University of Pennsylvania - Perelman School of Medicine

Date Written: June 2016

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 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.

Keywords: Post-Acute Care, Vertical Integration, Medicare

JEL Classification: I11, I18

Suggested Citation

Konetzka, R. Tamara and Stuart, Elizabeth A. and Werner, Rachel, The Effect of Integration of Hospitals and Post-Acute Care Providers on Medicare Payment and Patient Outcomes (June 2016). Available at SSRN: https://ssrn.com/abstract=2805172 or http://dx.doi.org/10.2139/ssrn.2805172

R. Tamara Konetzka

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

Elizabeth A. Stuart

Johns Hopkins University - Bloomberg School of Public Health ( email )

615 North Wolfe Street
Baltimore, MD 21205
United States

HOME PAGE: http://www.biostat.jhsph.edu/~estuart

Rachel Werner (Contact Author)

University of Pennsylvania - Perelman School of Medicine ( email )

423 Guardian Drive
Philadelphia, PA 19104
United States

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