Journal of Public Economics: https://doi.org/10.1016/j.jpubeco.2025.105435
Key subjects: provider-induced demand; gaming; consolidation; hospice; Medicare; policy; non-linear program design; health care utilization
Abstract: Combining capitation with a cap on health care providers’ average revenue can reduce allocative inefficiency. But the cap may be undercut by health care providers who churn their patient censuses. We investigate this possibility in the U.S. hospice industry, where Medicare pays hospice programs fixed daily rates but caps their average annual revenue. By leveraging variation generated by the cap’s nonlinear design and the transition between fiscal years, we find that programs on track to exceed the cap raise enrollment rates by 5.8% and live discharge rates by 4.3% in the fourth quarter. But this churning falls far short of eliminating their financial penalties: it amounts to 10% of an average program’s excess revenue at most. Marginal enrollees have longer remaining lifetimes and more fragmented hospice spells on average, suggesting weaker intrinsic demand for hospice care. We discuss the cap’s implications for market structure.
This was circulated as NBER Working Paper 31691.
Health Affairs Scholar: https://doi.org/10.1093/haschl/qxae160
Key subjects: market segmentation; hospice; referral networks; Alzheimer's disease and related dementia
Abstract: How do referral networks and medical conditions determine where patients get care? We study this question in the U.S. hospice industry, where for-profit hospice programs enroll more long-term care patients and more patients with Alzheimer’s disease and related dementia. We find that for-profit hospice enrollees have 23% longer lifetime lengths-of-stay in hospice care than not for-profit hospice enrollees with the same medical conditions, institutional referral source, state of residence, and enrollment year. This and other differences in their end-of-life health care utilization suggest that hospice market segmentation is the result of a patient-specific selection mechanism that is partially independent of institutional barriers to hospice care.
Journal of the American Medical Directors' Association (JAMDA): https://doi.org/10.1016/j.jamda.2025.105630
Key subjects: nursing homes; health care infrastructure investment; financial markets; health policy
Extended abstract:
Objectives: Many nursing homes require significant modernization to enhance resident quality of life, yet access to capital remains a critical barrier, especially for those dependent on Medicaid funding. The Housing and Urban Development (HUD) 232-sponsored loan program helps insure low-interest financing to nursing homes, but its impact on capital accessibility and quality improvement remains unclear. This study examines nursing home characteristics associated with receiving HUD 232-sponsored loans.
Design: Linear probability model to assess facility, resident, financial, and county-level characteristics predicting HUD 232 loan likelihood.
Setting and Participants: We analyzed nursing homes from 2012 to 2021, with the HUD 232 cohort spanning 2013 to 2020, using a comprehensive data set combining HUD 232-sponsored loan data, CMS Nursing Home Compare, LTCFocus, and Medicare Cost Reports.
Methods: We used a linear probability model to evaluate the relationship between facility characteristics and the likelihood of receiving a HUD 232-sponsored loan, focusing on factors such as ownership type, financial stability, staffing levels, and resident demographics.
Results: Nursing homes with higher operating margins, higher proportions of Medicare residents, and in rural locations were significantly more likely to receive HUD 232-sponsored loans (P<.01). In contrast, not-for-profits were underrepresented among loan recipients (P<.01). There was no significant association between quality measures, such as overall star ratings and health deficiencies, and loan uptake.
Conclusions and Implications: The findings suggest that although the HUD 232-sponsored loan program improves access to capital for financially stable nursing homes, it may exclude others in need of funding, such as not-for-profits and nursing homes serving fewer Medicare residents. Policy makers should consider reforms to better align the program with its goal of supporting modernization across the entire nursing home sector, particularly for those facilities that are financially disadvantaged.
Revise and resubmit at American Economic Journal: Economic Policy
Key subjects: entry barriers; competition; incumbent advantage; certificate-of-need; dialysis; access-to-care
Abstract: How do entry barriers in provider markets affect market structure and welfare? In the US, certificate-of-need (CON) programs statutorily prohibit capacity investment when a health planner determines that a community’s “needs” are already being met. I examine CON programs’ effects in the dialysis industry, where patients are sensitive to treatment access and quality. I find that they reduce entry and protect incumbents from potential competition while enabling them to expand. I use variation from two natural experiments and a structural model of patient preferences to find that marginal entrants improve access and the patient-treatment match, lower congestion, and raise monthly countywide patient welfare by an amount equal to reducing travel by 9,254 miles.
Revise and resubmit at Kidney360
Key subjects: health care spending; dialysis; chronic kidney disease
Extended abstract:
Background: End‑stage renal disease (ESRD) is one of the fastest‑growing and costliest chronic conditions in the United States. We forecasted net spending by the US government through 2040 for persons with prevalent ESRD and Medicare and examined how it could change if person-years treated with hemodialysis were diverted to other treatment modalities, an earlier stage of kidney disease, or no kidney disease.
Methods: We conducted a time-series observational analysis of aggregated, secondary data spanning 2002-2022 published by the US Renal Data System (USRDS). The data included all persons with chronic kidney disease (CKD) or ESRD with fee-for-service Medicare claims. We examined alternative scenarios in which person-years using hemodialysis are diverted to peritoneal dialysis, a kidney transplant, CKD Stages G4-5, and, in some cases, CKD Stage G3 and no kidney disease. The outcome measure was government spending, which is the sum of Medicare spending and disability benefits, net of federal tax revenue.
Results: Based on trends from the last two decades, the model forecasted 9.1 million person-years with ESRD and Medicare coverage during 2030-2040 and government spending for these person-years totaling $783 billion. We found that if person-years treated with hemodialysis were diverted, then government spending could subsequently fall by $13-126 billion over this time depending on the volume of diverted person-years and the extent to which the progression of kidney disease can be slowed.
Conclusion: Deliberate, evidence‑based investments that shift modalities and slow progression to ESRD could subsequently lower government spending by billions of dollars while improving the lives of people with kidney disease.
Under review
Key subjects: market structure; hospice; rural health; access-to-care
Extended abstract:
Context: The number of Medicare beneficiaries using hospice has grown substantially in the last two decades, yet a rural-urban gap remains. Home hospice care for rural residents faces distinct challenges, such as longer travel times between patients and workforce shortages, which may influence hospices’ financial viability.
Objectives: To examine program characteristics, care delivery and financial health of rural versus urban hospices.
Methods: Using Medicare claims and the Healthcare Provider Cost Reporting Information System data from 2015-2018, we estimate the association between rurality and operational, care delivery, and financial measures adjusting for ownership type, program age, total patient volume, and year fixed effects with standard errors clustered at the hospice-level.
Results: Overall, rural hospice programs were not significantly different in average profit relative to urban hospice programs. However, the financial components differ. Rural hospices have significantly lower average costs, due in part to lower administrative costs, but also have lower average revenue than their urban counterparts. The difference in revenue is commensurate with the difference in costs.
Conclusion: The differences between urban and rural hospices’ financial characteristics suggest that rural hospices adopt different service and revenue models than their urban counterparts. Some differences could be in part driven by the Medicare payment formula, which adjusts for geographic variation in staffing costs, but not other costs. If expansion of hospice in rural areas is desired, additional examination of the financial viability of these models is warranted.
Key subjects: econometric theory; difference-in-differences; event study; multiple events; matching
Abstract: An event study is an empirical framework for measuring the impact of an event over time using observational data. Under no anticipation and parallel trends assumptions, difference-in-differences are known to identify the event's average treatment effect on the treated when units experience one event at most. In this paper, I introduce a new event study framework to accommodate settings where units may experience multiple events. I introduce a matching estimator which consistently and transparently estimates the average treatment effect on the treated of a single event under generalizations of the conventional no anticipation and parallel trends assumptions. I show that the matching estimator is equivalent to a weighted least squares estimator for a particular set of weights. I also introduce a parallel pre-trends test which can be used to scrutinize these assumptions in the usual sense. Finally, I demonstrate in a series of Monte Carlo simulations that the estimator and parallel pre-trends test work well for a wide range of treatment effects, including dynamic, non-stationary, and history-dependent treatment effects.