title: Ownership Status and Length of Stay in Skilled Nursing Facilities: Does Endogeneity Matter?
abstract: In 1998, Medicare implemented the Prospective Payment System for post-acute care provided by skilled nursing facilities. This system paid a fixed price per day above the cost of care, creating an incentive to provide longer length of stays to increase revenues. In this paper, we examine whether there are systematic differences in length of stay for post-acute care patients between for-profit and not-for-profit skilled nursing facilities. Based on the financial incentives inherent in the reimbursement system, we develop a conceptual framework that argues for-profits will provide a greater number of days of care to increase profits relative to not-for-profits. We find significant differences in length of stay by ownership, but once patient selection into a facility is accounted for using two-staged residual inclusion, there is no statistical differences in length of stay between for-profit and not-for-profit facilities.
authors.affiliation: Miami University, Oxford, OH, USA.
authors.forename: John R
authors.initials: JR
authors.lastname: Bowblis
authors.affiliation: Ball State University, Muncie, IN, USA jhorowitz@bsu.edu.
authors.forename: John
authors.initials: J
authors.lastname: Horowitz
authors.affiliation: Georgia Southern University, Statesboro, USA.
authors.forename: Christopher S
authors.initials: CS
authors.lastname: Brunt
mesh_terms: D000368:Aged; D000369:Aged, 80 and over; D005260:Female; D006269:Health Facilities, Proprietary / Q000706:statistics & numerical data*; D006801:Humans; D053208:Kaplan-Meier Estimate; D007902:Length of Stay / Q000706:statistics & numerical data*; D008297:Male; D006278:Medicare; D010067:Ownership; D016016:Proportional Hazards Models; D011445:Prospective Payment System / Q000191:economics*; D011787:Quality of Health Care / Q000191:economics; D012052:Reimbursement, Incentive / Q000191:economics*; D012866:Skilled Nursing Facilities / Q000191:economics*; D014481:United States
keywords: Medicare; endogeneity; length of stay; post-acute care; reimbursement; skilled nursing facilities