TY  - JOUR
AU  - Einav, Liran
AU  - Finkelstein, Amy
AU  - Mahoney, Neale
TI  - Long-Term Care Hospitals: A Case Study in Waste
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 24946
PY  - 2018
Y2  - August 2018
DO  - 10.3386/w24946
UR  - http://www.nber.org/papers/w24946
L1  - http://www.nber.org/papers/w24946.pdf
N1  - Author contact info:
Liran Einav
Stanford University
Department of Economics
579 Jane Stanford Way
Stanford, CA  94305-6072
Tel: 650/723-3704
Fax: 650/725-5702
E-Mail: leinav@stanford.edu

Amy Finkelstein
Department of Economics, E52-442
MIT
77 Massachusetts Avenue
Cambridge, MA 02139
Tel: 617/253-4149
Fax: 617/868-2742
E-Mail: afink@mit.edu

Neale Mahoney
Department of Economics
Stanford University
579 Jane Stanford Way
Stanford, CA 94305
E-Mail: nmahoney@stanford.edu
AB  - 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 – 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 dimensions we can objectively measure. 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.
ER  -