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Client Characteristics and the Cost of Home Care in the Prospective Payment System


Kathleen S. Hanson, The University of Iowa, College of Nursing, 382, Nursing Building, Iowa City, IA 52242. E-mail:


Abstract  There has been much speculation in the literature about the effect of the prospective payment system (PPS) on the home care industry but few reports of systematic investigation. Clearly, comprehension of client characteristics is essential for categorizing home care clients into the correct Home Health Resource Groups, for allocating resources appropriately, and for implementing necessary organizational changes to accommodate clients who require variations in the amount of resources predicted by the PPS. The purposes of this study were to compare the characteristics of home health clients that resulted in a financial gain or a financial loss for one agency under the PPS with those of the interim payment system. A secondary data analysis of 140 cases compiled by one not-for-profit hospital-affiliated home care organization was completed. Results suggested that client characteristics of the projected loss group had more recertifications on admission and at the end of the 60-day episode, a longer stay (3 weeks), and more visits, particularly from skilled nursing. Comprehension of client characteristics and the subsequent ability to adjust for the proper case mix will be crucial if home care agencies are to remain financially viable under the PPS. Replication of this project needs to be done using more variables and multiple sites.