Entry, growth, and exit patterns in the home healthcare industry

The expansion of home healthcare could allow the elderly to gain easy access to medical services in rural areas. Although most of the previous studies focus on the impact of the use of home healthcare on hospital discharge or the determinants of geographical variation, we examine the entry, growth, and exit patterns of home healthcare providers using detailed establishment-level data from Texas. Our results indicate that the number of home care providers almost doubled in Texas between 2000 and 2006; hence, the average distance between households and home care establishments decreased by more than 50%. We also find that entrants can enjoy localized economies in the presence of firms that provide complementary medical services, while they tend to avoid areas with more competing institutions, such as hospitals, that provide alternative medical services. Our results also provide strong evidence for the spatial persistence of employment in the home care industry.