This study investigated the variation in the utilization of the Skilled Nursing Facility (SNF) benefit under the Medicare program. Data for the study were obtained from Medicare claims files for the period from July 1, 1984 through June 30, 1985. Hypotheses relating local market characteristics and state Medicaid policies to SNF utilization were developed and tested.

Two approaches were used to model the utilization of SNF services. The first model predicted the utilization of SNF services at the level of the Metropolitan Statistical Area (MSA). Two-stage least squares regression was used to estimate the model with a second equation used to predict the supply of SNF beds in an MSA.

The second approach used the individual patient as the unit of analysis. Logistic regression was used to predict the probability that a hospital patient would used SNF care after discharge, based on patient characteristics, characteristics of the patient's hospital, and characteristics of the hospital's MSA.

Findings from the two approaches were generally consistent. Market characteristics such as the SNF bed supply, whether the beds were located in hospitals, and medical practice patterns were found to affect the SNF utilization in a metropolitan area. The author concluded that there were shortages of Medicare-certified SNF beds in some areas. The author also concluded that other Medicare posthospital services are being substituted for SNF services. In addition, the author suggested that low-income patients may have trouble obtaining Medicare SNF services, and further research should seek to discover the reasons for the apparent trouble.