Growth and Decline in the Supply of Providers of Medicare-Covered Home Health Services in the 80's

Abstract

Using Health Care Financing Administration (HCFA) data, this study documents national and regional patterns of market entry and exit in the home health industry from 1980 to 1990. Nationally, agency origination rates accelerated during the early 1980's, then dropped abruptly in the second half of the decade. The for-profit sector exhibited the greatest volatility. Of the 3,620 proprietary agencies in existence during the decade, 3,284 (90.7%) were new entrants, and 1,551 exited the market by 1990. Regional differences in growth rates and the timing of market entry are also evident. Both growth and decline in the home health industry appear to be a response to the incentives of legislation implemented during this period.