Duke 2008 | ASHE | Equity and Efficiency in Health and Healthcare

Nursing home quality of care continues to be an important public policy issue in spite of prolonged public outcry and government commissions addressing this issue. Often the number of nurses per resident is low and the staff turnover rate is high. Residents may develop new health problems after admission from physical restraints and missed medications. Amenities that are public goods within a nursing home including the food, activities, and public spaces are too often substandard. Nursing home quality of care is of public concern because a high fraction of the elderly will live in a nursing home eventually, and the government pays for more than half of all nursing home costs. Therefore, economists have long studied the causes and potential policy responses to low quality nursing home care.

The recent academic interest in nursing home quality of care is driven by important new government policies aimed at improving quality of care and structural changes in the long-term care market that affect how nursing homes compete. We first review these major policies and trends. This research has also benefited from newly-available data sets, which we summarize briefly. Finally, we synthesize the economic literature on nursing home quality of care published primarily since 2000.

Topics included in the review of the literature are the level and method of Medicaid and Medicare payment for nursing homes services, the role of certificate-of-need regulation, the ownership status of the nursing home, and of particular interest for this session, the publicizing of quality information. If consumers use quality information to make informed decisions about nursing home entry, then public information may help to improve quality. For example, one study indicates that nursing homes with many deficiencies are more likely to go out of business, either voluntarily or un-voluntarily, than those with few deficiencies. In related research, homes with greater physical restraint use are also more likely to close, although this finding was not robust to other process and outcome based quality measures. Thus, there is some qualified evidence that information improves quality by removing the worst offenders. However, terminations, even of the lowest quality nursing home, may still have adverse consequences. When these nursing homes terminate, there is evidence that access to care is reduced for some populations, typically those living in the poorest communities. Therefore, information about quality of care may improve quality of care for remaining nursing homes while reducing access for some.