The value of an additional day of post-acute care in a skilled nursing facility

With ongoing efforts to improve the value of health care in the U.S. and reduce wasteful spending, we examine empirically the value tradeoffs involved in an additional day in a skilled nursing facility (SNF) after hospital discharge. To control for potential endogeneity, we use the percentage of Medicare beneficiaries enrolled in Medicare Advantage in each county-year as an instrument for individuals’ SNF length of stay among Traditional Medicare beneficiaries, as local Medicare Advantage penetration puts downward pressure on SNF length of stay for all SNF patients but does not directly affect utilization management of those enrolled in Traditional Medicare. We also test for heterogeneity in treatment effect across patients by clinical complexity and two non-health-related factors, marital status and nursing home profit status. We find that one additional day in a SNF lowers short-term readmission rates, but this effect is small and heterogeneous across patient-types. The most clinically complex patients (those with the longest predicted SNF stays) benefit the most from an additional SNF day, as do patients whose stays are shorter due to non-health-related factors. The cost savings from reduced readmission rates are small and do not offset the additional SNF costs.