Who Rules Home Care? The Impact of Privatization on Profitability, Cost, and Quality

Abstract

This article explores the literature, including two recent studies, on whether home health agency (HHA) ownership type plays a significant role in agency quality, cost, and profitability. The literature is limited, except for the two recent studies that use a merged database created from the Medicare Home Health Compare and the 2010 Medicare home health cost reports databases. One study found statistically significant differences between proprietary and non-profit HHAs: Proprietary agencies have lower overall quality, higher profitability, higher costs per patient, and more visits per patient, with therapy visits accounting for a larger share of the total. However, the second study found that the explanatory value of ownership is limited, with the number of HHAs in the state and therapy visits as a percentage of total visits having a significant influence on cost and quality when combined with ownership compared with ownership alone. Policy, practice, and research implications are discussed.