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Practice Patterns among Entrants and Incumbents in the Home Health Market after the Prospective Payment System was Implemented
Author(s) -
Kim Hyunjee,
Norton Edward C.
Publication year - 2015
Publication title -
health economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.55
H-Index - 109
eISSN - 1099-1050
pISSN - 1057-9230
DOI - 10.1002/hec.3147
Subject(s) - payment , prospective payment system , business , home health , agency (philosophy) , health care , profit (economics) , marketing , public economics , economics , finance , microeconomics , economic growth , philosophy , epistemology
Home health care expenditures were the fastest growing part of Medicare from 2001–2009, despite the implementation of prospective payment. Prior research has shown that home health agencies adopted two specific strategies to take advantage of Medicare policies: provide at least 10 therapy visits to get an enormous marginal payment and recertify patients for additional episodes. We study whether there is heterogeneity in the adoption of those strategic behaviors between home health agency entrants and incumbents and find that entrants were more likely to adopt strategic practice patterns than were incumbents. We also find that for‐profit incumbents mimicked one of the practice patterns following entrants in the same market. Our findings suggest that it is important to understand the heterogeneity in providers' behavior and how firms interact with each other in the same market. These findings help explain the rapid rise in expenditures in the home health care market. Copyright © 2015 John Wiley & Sons, Ltd.