New long-term-care hospitals' performance after implementation of a prospective payment system

Long-term-care hospitals (LTCHs) treat chronically ill patients who need treatment for extended lengths of time. Throughout the 21st century, the number of LTCHs in the United States has tended to increase. In this study, the authors evaluated the utilization and financial performance of new LTCHs after the implementation of Medicare's prospective payment system. In the 1st year of operation, new LTCHs relative to existing facilities had fewer occupied beds, shorter length of stay, and lower financial performance. In the 2nd year, the financial performance and utilization of the new facilities became comparable to those of existing facilities.