Market segmentation by profit status: evidence from hospice.

How do referral networks and medical conditions determine where patients get care? We study this question in the US Hospice Industry, where for-profit hospice programs enroll more long-term care patients and more patients with Alzheimer's disease and related dementia. We find that for-profit hospice enrollees have 23% longer lifetime lengths-of-stay in hospice care than not for-profit hospice enrollees with the same medical conditions, institutional referral source, county of residence, and enrollment year. This and other differences in their end-of-life health care utilization suggest that hospice market segmentation is the result of a patient-specific selection mechanism that is partially independent of institutional barriers to hospice care.