Home healthcare siphons off patients from hospitals

Home healthcare has taken a bite out of the hospital market, based on a study by Frank Lichtenberg, a business school professor at Columbia University.

Lichtenberg estimates the U.S. saved up to $25 billion in hospital payroll costs in 2008 due to the growth of the home health sector. And further savings are likely if home healthcare continues to grow.

The findings suggest that the quickly growing population of senior citizens will not necessarily lead to an expanded hospital market.

To see whether home healthcare could serve as a substitute for hospital care, Lichtenberg's study looks at employment and payroll growth in the two sectors, as well as other factors such as length of stay and share of patients discharged to home healthcare.

"An important reason why home healthcare may serve as a substitute for hospital care is that the availability of home healthcare may allow patients to be discharged from the hospital earlier," Lichtenberg writes in his abstract.

From 1998 to 2008, the average length of a hospital stay dropped 4 percent from 4.78 days to 4.59 days. According to Lichtenberg, it's likely the drop was due to a jump in the share of patients who were discharged to home healthcare. That share rose from 6.4 percent to 9.9 percent between 1998 and 2008.

What's more, his analysis revealed that states with higher home healthcare employment growth between 1998 and 2008 saw lower growth in hospital employment. He also noticed that states with higher home healthcare payroll growth had lower hospital payroll growth.

To learn more:
- here's an article abstract
- read the press release