Market Competition and the Quality of Home Health Services

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DESCRIPTION (provided by applicant): A high quality and well functioning home health care industry is an essential part of an integrated health care system that strives to reduce health care costs and improve the health outcomes of the population. Recently the federal government has embraced market-based reforms to improve the quality of the health care system through public reporting of quality information and by basing reimbursement on the provider performance. These reforms reach the home health care sector in 2004 when the federal government launched the Home Health Quality Initiative (HHQI) for reporting of quality information. Pay for performance in home health is also planned. These reforms require a well functioning competitive market to achieve their stated aims. Yet competition may be stifled in home health in states with binding Certificate of Need (CON) regulations which are designed restrict entry of home health agencies. The goal of this project is to establish the relationship between competition and quality in the home health industry and the relationship between competition and the market-based reform of HHQI. We will test whether competition improves quality, whether HHQI improves quality, and whether the quality improvement from HHQI is greater in more competitive markets. Our approach is to analyze competition and quality for all home health care markets in the U.S. by creating a hierarchical panel file for the years 2001-2006 of patients, agencies, and markets. The file will be created from Medicare and OASIS data by linking Medicare claims for hospitals to the home health agency claim and OASIS data for those patients discharged from the hospital to the home health agency. We will use the Herfindahl-Hirschman Index as our measure of competition and home case visits, functional status improvements, readmissions, and adverse events as indicators of quality. Our analyses will involve the use of panel and instrumental variables econometric techniques. Ultimately our goal is to inform policy with respect to policy measures that promote competition on quality through firm entry, information reporting, and payment for performance. PUBLIC HEALTH RELEVANCE: With an interest in improving the quality of home health care delivery, this application aims to determine whether more competitive home health markets have higher quality care and whether the Home Health Quality Initiative of 2004 improved quality more in the more competitive markets.