For-profit, or proprietary, home health agencies were banned from Medicare until 1980 but now account for a majority of the agencies that provide such services. Medicare home health costs have grown rapidly since the implementation of a risk-based prospective payment system in 2000. We analyzed recent national cost and case-mix-adjusted quality outcomes to assess the performance of for-profit and nonprofit home health agencies. For-profit agencies scored slightly but significantly worse on overall quality indicators compared to nonprofits (77.18 percent and 78.71 percent, respectively). Notably, for-profit agencies scored lower than nonprofits on the clinically important outcome "avoidance of hospitalization" (71.64 percent versus 73.53 percent). Scores on quality measures were lowest in the South, where for-profits predominate. Compared to nonprofits, proprietary agencies also had higher costs per patient ($4,827 versus $4,075), were more profitable, and had higher administrative costs. Our findings raise concerns about whether for-profit agencies should continue to be eligible for Medicare payments and about the efficiency of Medicare's market-oriented, risk-based home care payment system.
This study is the first to examine how home health agency ownership and other determinants affect patient satisfaction with Medicare home health agency care. For the first time, data residing in three separate Medicare databases have been integrated for analysis. Multiple linear regression was used with independent variables that measure seven categories of home health agency characteristics and services: ownership type, costs, cost-related ratios, revenue, quality, years certified, and visits. Results show five variables statistically significant in a model predicting home health agency patient satisfaction; the two largest contributors are total home health costs and years of agency certification. The study gives policymakers and home health agencies insights into the key determinants of patient satisfaction and demonstrates the value of integrating multiple Medicare databases.
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