Home healthcare is a rapidly growing area of the health sector in the United States. We study its role in the shift toward value-based care, as it is viewed as an avenue for achieving reductions in the cost and utilization of expensive downstream healthcare services. Using a novel data set on home healthcare visits, we examine whether and how the amount of time that a provider spends during a home health visit with a recently discharged patient impacts the patient’s likelihood of being readmitted to the hospital. Because unobserved patient health status may influence both the length of a home health visit and the likelihood of hospital readmission, we use the within-provider average visit length of all other episodes’ visits conducted by each provider in the 30-day period before and after the focal visit as an instrument for visit length. Using this instrumental variable approach and controlling for operational, demographic, and patient condition-related characteristics, we find the following: on average, an extra minute during a focal home health visit is associated with a 1.39% decrease in the likelihood of readmission to the hospital following that visit. Our finding suggests that a 10% increase in visit length would decrease the likelihood of readmission following a home health visit by 6%. We document heterogeneity in this effect across different patient types and visit types. We conduct a cost–benefit analysis that suggests that the cost of investing in additional home health capacity is outweighed by the cost savings arising from fewer hospitalizations.
This paper was accepted by Stefan Scholtes, healthcare management.