Few studies have analyzed for-profit and nonprofit differences in the home health care sector. Using data from the National Home and Hospice Care Survey, we found that patients in nonprofit agencies were more likely to be discharged within 30 days under Medicare cost-based payment compared to patients in for-profit agencies. However, this difference in length of enrollment did not translate into meaningful differences in discharge outcomes between nonprofit and for-profit patients, suggesting that -under a cost-based payment system -nonprofits may behave more efficiently relative to forprofits. These results highlight the importance of organizational and payment factors in the delivery of home health care services.
Keywordshome health care; ownership; for-profit; nonprofit; discharge An important feature of most health care markets in the United States is the dual presence of for-profit and nonprofit-owned providers. Unlike their for-profit counterparts, nonprofits cannot distribute accounting profits to individual equity holders, but they do enjoy several government-conferred advantages, including exemption from corporate income and property taxes. Given that nonprofits lack a defined shareholder, there may be less incentive for these firms to maximize profits and greater incentive to maximize other objectives such as the quality of care and provision of public goods (e.g., charity care) (Hansmann 1980;Newhouse 1970).Researchers have generated a large empirical literature examining whether for-profit and nonprofit health care providers perform differently along a number of dimensions. For example, a recent review of the nursing home literature identified 38 studies on nonprofit and for-profit quality differences published over the period 1990 through 2002(Hillmer et al. 2005). In contrast, few studies have analyzed for-profit and nonprofit differences in the home health care sector (Rosenau, and Linder 2001). This lack of recent research is somewhat surprising in the context of the tremendous growth of the home health care sector and the prominent role of for-profit agencies. Between 1980 and 2004, aggregate expenditures on home health care increased from $2.4 billion (0.9% of national health expenditures) to $43.2 billion (2.3%) (Smith et al. 2006). Around half of all home health agencies (52%) operate on a forprofit basis (Medicare Payment Advisory Commission 2004 According to the 1994 through 2000 waves of the National Home and Hospice Care Survey (NHHCS), Medicare is the primary payer of home health care for nearly two-thirds of patients who receive services (Grabowski et al. 2006). Historically, agencies were paid by Medicare on the basis of their costs, up to pre-established per-visit limits. Under this system, agencies could enhance their revenues by providing a greater number of beneficiaries with additional visits. Given the presence of a defined shareholder, for-profit agencies have a greater incentive to maximize profits by enrolling patients for longer periods under a cost-based payment sys...