Understanding hospital referrals to home health agencies.

Using resource dependency theory and transaction-cost economics theory, we examined the simultaneous effects of a vertical integration strategy and environmental complexity on home health agency (HHA) referrals by hospitals. Discharge data for calendar year 1990 from 61 Pennsylvania hospitals were analyzed. Using hospital ownership of home health agencies and urban versus rural location as the primary independent variables, a logistic regression model calculated the probability of HHA referral, after controlling for long-term care beds and patient characteristics. Results showed that HHA ownership was a significant predictor of home health referrals for both rural and urban hospitals, although the effect was greater for urban hospitals. These results suggest that hospitals are actively using referrals to home healthcare in response to environmental pressures. As these pressures increase, hospitals will benefit from tight linkages with home health providers.