“Long-Term Care Hospitals: A Case Study in Waste,” by Liran Einav, Amy Finkelstein, Neale Mahoney, National Bureau of Economic Research

“There is substantial waste in U.S. healthcare, but little consensus on how to identify or combat it. We identify one specific source of waste: long-term care hospitals (LTCHs). These post-acute care facilities began as a regulatory carve-out for a few dozen specialty hospitals, but have expanded into an industry with over 400 hospitals and $5.4 billion in annual Medicare spending in 2014. We use the entry of LTCHs into local hospital markets and an event study design to estimate LTCHs’ impact. We find that most LTCH patients would have counterfactually received care at Skilled Nursing Facilities (SNFs) – post-acute care facilities that provide medically similar care to LTCHs but are paid significantly less – and that substitution to LTCHs leaves patients unaffected or worse off on all measurable dimensions. Our results imply that Medicare could save about $4.6 billion per year – with no harm to patients – by not allowing for discharge to LTCHs.”

LTC Comment (from Stephen A. Moses, President, Center for Long-Term Care Reform):

This is the abstract for the full paper which is available through NBER here: http://www.nber.org/papers/w24946.pdf. Could treating high-acuity LTCH patients in SNFs save money without tipping the delicate balance of high Medicaid dependency and low reimbursement against quality for all LTC patients, including the dwindling supply of private payers? I’m very dubious.

Long-Term Care Hospitals: A Case Study in Waste

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