They have no impetus to change and think they have found an approach that works reasonable well when given absurd amounts of candidates. The problem is the ridiculous false negative rate.
I struggle to think of a better system. Using experience is unfair and misleading (I worked on awesome stuff... that I can tell you nothing about, I was totally the lead on this software, etc...). Take home stuff is fine with me but a lot of people have problems with it. Come in for a week type things are incredibly applicant hostile.
Sit down with me and lets try and fix this bug seems like a more reasonable solution to me. Dev environment has the most popular ide with their devs, the source for whatever, internet access, and a bug report. Person is there to assist.