title: For-profit medicare home health agencies' costs appear higher and quality appears lower compared to nonprofit agencies.
abstract: 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.
authors.affiliation: William Cabin (williamcabin@yahoo.com) is an assistant professor of social work at Temple University, in Philadelphia, Pennsylvania, and a doctoral candidate at the City University of New York (CUNY) School of Public Health.
authors.forename: William
authors.initials: W
authors.lastname: Cabin
authors.affiliation: David U. Himmelstein is a professor at the School of Public Health and Hunter College, CUNY.
authors.forename: David U
authors.initials: DU
authors.lastname: Himmelstein
authors.affiliation: Michael L. Siman is director of research, Youth Consultation Service in East Orange, New Jersey.
authors.forename: Michael L
authors.initials: ML
authors.lastname: Siman
authors.affiliation: Steffie Woolhandler is a professor at the School of Public Health, CUNY.
authors.forename: Steffie
authors.initials: S
authors.lastname: Woolhandler
mesh_terms: D003365:Costs and Cost Analysis; D006269:Health Facilities, Proprietary / Q000191:economics* / Q000592:standards; D018574:Home Care Agencies / Q000191:economics / Q000592:standards*; D006760:Hospitalization; D006801:Humans; D006278:Medicare / Q000191:economics*; D009939:Organizations, Nonprofit / Q000191:economics* / Q000592:standards; D011445:Prospective Payment System; D011446:Prospective Studies; D011787:Quality of Health Care; D014481:United States
keywords: Cost of Health Care; Home Care; Medicare; Nonprofit/For-Profit Status; Quality Of Care