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

58 Pages Posted: 7 Sep 2016

See all articles by Paul Eliason

Paul Eliason

affiliation not provided to SSRN

Paul L.E. Grieco

Pennsylvania State University - Department of Economics

Ryan C. McDevitt

Fuqua Graduate School of Business - Duke University; Duke Innovation & Entrepreneurship Initiative

James W. Roberts

Duke University

Date Written: September 2016

Abstract

Medicare's prospective payment system for long-term acute-care hospitals (LTCHs) pro- vides modest reimbursements at the beginning of a patient's stay before jumping discontinuously to a large lump-sum payment after a pre-specified number of days. We show that LTCHs respond to financial incentives by disproportionately discharging patients after they cross the large-payment threshold, resulting in worse outcomes for patients. We find this occurs more often at for-profit facilities, facilities acquired by leading LTCH chains, and facilities co-located with other hospitals. Using a dynamic structural model, we evaluate counterfactual payment policies that would provide substantial savings for Medicare without adversely affecting patients.

Suggested Citation

Eliason, Paul and Grieco, Paul L.E. and McDevitt, Ryan C. and Roberts, James W., Strategic Patient Discharge: The Case of Long-Term Care Hospitals (September 2016). NBER Working Paper No. w22598, Available at SSRN: https://ssrn.com/abstract=2835856

Paul Eliason (Contact Author)

affiliation not provided to SSRN

Paul L.E. Grieco

Pennsylvania State University - Department of Economics ( email )

University Park
State College, PA 16802
United States

Ryan C. McDevitt

Fuqua Graduate School of Business - Duke University ( email )

100 Fuqua Dr
Durham, NC 27708
United States

HOME PAGE: http://www.ryanmcdevitt.com

Duke Innovation & Entrepreneurship Initiative ( email )

215 Morris St., Suite 300
Durham, NC 27701
United States

James W. Roberts

Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

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