Medicare Spending and Outcomes After Postacute Care for Stroke and Hip Fracture

BACKGROUND: Elderly patients who leave an acute care hospital after a stroke or a hip fracture may be discharged home, or undergo postacute rehabilitative care in an inpatient rehabilitation facility (IRF) or skilled nursing facility (SNF). Because 15% of Medicare expenditures are for these types of postacute care, it is important to understand their relative costs and the health outcomes they produce. OBJECTIVE: To assess Medicare payments for and outcomes of patients discharged from acute care to an IRF, a SNF, or home after an inpatient diagnosis of stroke or hip fracture between January 2002 and June 2003. RESEARCH DESIGN: This is an observational study based on Medicare administrative data. We adjust for observable differences in patient severity across postacute care sites, and we use instrumental variables estimation to account for unobserved patient selection. STUDY OUTCOMES: Mortality, return to community residence, and total Medicare postacute payments by 120 days after acute care discharge. RESULTS: Relative to discharge home, IRFs improve health outcomes for hip fracture patients. SNFs reduce mortality for hip fracture patients, but increase rates of institutionalization for stroke patients. Both sites of care are far more expensive than discharge to home. CONCLUSIONS: When there is a choice between IRF and SNF care for stroke and hip fracture patients, the marginal patient is better off going to an IRF for postacute care. However, given the marginal cost of an IRF stay compared with returning home, the gains to these patients should be considered in light of the additional costs.