Does Post-acute Care Improve Patient Outcomes? A Comparison of Skilled Nursing Facilities and Home Health Care

The use of post-acute care has grown substantially over the past few decades. Nearly 40% of Medicare beneficiaries receive post-acute care after a hospital discharge, and most of those go either to a skilled nursing facility (SNF) or home with care from a home health agency (HHA). In 2015, Medicare spent over $60 billion on post-acute care, of which $48 billion went to SNF and HHA. Despite the proliferation of post-acute care, it is uncertain whether post-acute care benefits patients or whether the choice of specific post-acute care setting matters (i.e. choosing SNF versus HHA). Indeed, the use of post-acute care varies significantly across the country, suggesting substantial uncertainty about its value to patients.

In this paper, we investigate the impact of discharge to SNF versus HHA on patient outcomes. We use data from 2010-2014 on all Medicare fee-for-service beneficiaries who are discharged from the hospital and receive post-acute care in either SNF or HHA. We estimate the effect of post-acute care setting on the following patient-level outcomes: death within 30 days of hospital discharge, readmission within 30 days of hospital discharge, successful discharge to the community, and improvement in functional status during the post-acute care episode. To address the endogeneity of treatment choice, we use an instrumental variables approach, using as an instrument the differential distance between the beneficiary’s home ZIP code and the closest HHA and the closest SNF. The instrument passes standard tests of first-stage strength. In all regressions, we include measures of patient case mix, diagnosis related groups, year fixed effects, and hospital fixed effects.

Using ordinary least squares regression, we find substantial differences in patient outcomes by discharge setting. Compared to patients discharged to SNF, patients discharged to home health have lower readmission and death rates (by 2.5 and 4.7 percentage points respectively), are much more likely to be successfully discharged to the community (by 25 percentage points) and experience improvement in functional status while in post-acute care (by 54.3 percentage points). These findings are consistent with selection; healthier patients are more likely to be discharged with home health. In the instrumental variable specifications which account for this selection bias, these results change. Patients discharged to home health are still more likely to be successfully discharged to the community, although the effect size is about half (13 percentage points). However, patients discharged to home health are also more likely to be readmitted to the hospital (by 5.5 percentage points). They are no more likely to die. The difference in functional status improvement favored home health but was not statistically different from zero. These preliminary results suggest there are important tradeoffs between home health and SNF care for patients needing post-acute care. While current policies may incentivize the use of lower-intensity settings (such as home health care) for patients needing post-acute care, lower intensity settings may have adverse outcomes that need to be taken into account and balanced against the lower cost of using home health.