American Economic Review Vol. 108 No. 11 2018

Strategic Patient Discharge: The Case of Long-Term Care Hospitals

Paul J. Eliason¹; Paul L. E. Grieco²; Ryan C. McDevitt³; James W. Roberts⁴

¹ Department of Economics, Brigham Young University, 130 Faculty Office Building, Provo, UT 84602 (email: ) · ² Economics, Pennsylvania State University, 508 Kern Building, University Park, PA 16802 (email: ) · ³ Fuqua School of Business, Duke University, 100 Fuqua Drive, Durham, NC 27708, and NBER (email: ) · ⁴ Department of Economics, Duke University, 228B Social Sciences Building, Durham, NC 27708 (email: )

Abstract

Medicare's prospective payment system for long-term acute-care hospitals (LTCHs) provides modest reimbursements at the beginning of a patient's stay before jumping discontinuously to a large lump-sum payment after a prespecified number of days. We show that LTCHs respond to the financial incentives of this system by disproportionately discharging patients after they cross the large-payment threshold. We find this occurs more often at for-profit facilities, facilities acquired by leading LTCH chains, and facilities colocated with other hospitals. Using a dynamic structural model, we evaluate counterfactual payment policies that would provide substantial savings for Medicare.

DOI

10.1257/aer.20170092

Volume

108

Issue

11

Pages

3232-3265

Language

en

Sources

bibtex:phds-export.bib openalex crossref

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