Selection and the Quality Impact of Nursing Home Ownership

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DESCRIPTION (provided by applicant): The quality of care delivered to frail elders residing in nursing homes remains an important and perplexing issue in American health policy. Given the preferential tax treatment afforded nonprofit firms, there has been much interest among policymakers and researchers alike in examining whether the nonprofit sector provides higher quality relative to its for-profit counterpart. A large literature examines this issue, but the vast majority of the existing studies have taken a cross-sectional approach to compare for-profit and nonprofit quality. However, the type of consumer who chooses a nonprofit facility may be quite different in many unobserved ways from the consumer who selects a for-profit facility. If so, simple comparisons of quality in for-profits and nonprofits, controlling for observable characteristics, may yield misleading estimates. By using "differential distance" to the nearest nonprofit nursing home relative to the nearest for-profit nursing home, we can mimic randomization of residents into more or less "exposure" to nonprofit homes when estimating the effects of ownership on quality of care. Based on this methodology, the following specific aims are proposed: Aim 1: To examine selection and access differences across for-profit and nonprofit nursing homes using a range of patient characteristics, including payer type, acuity, demographics (race, gender and age), and socio- economic status (education; zip code level income). Aim 2: To test the effect of differential distance to the nearest nonprofit nursing home relative to the nearest for-profit nursing home on likelihood of entry into a nonprofit nursing home. Planned sub-analyses include an examination of the role of distance and ownership choice in the context of urban/rural markets, discharges from hospitals with a sub-acute nursing home unit, and different subgroups of nursing home patients (e.g., is there evidence of a weaker relationship among racial minorities or Medicaid recipients, which may be the case if those residents are more likely to have to bypass the nearest facility in order to gain access to care). Aim 3: To use instrumental variables analysis to examine the effect of ownership on risk-adjusted, person-level short-stay measures of quality such as activities of daily living decline or 30-day re-hospitalization and risk- adjusted, person-level long-stay measures of quality such as pressure ulcers or physical restraints. Significance: By examining the link between nursing home ownership and quality of care, this study provides an opportunity to improve the quality of care for the millions of Americans receiving care in nursing homes. This study will also provide long-term care researchers with a potential new approach to analyzing for-profit and nonprofit differences which accounts for unobserved patient differences across ownership types, and which could also be applied to study the impact of other facility characteristics such as chain ownership. Thus, the information derived from this study has the potential to make important research and policy-relevant contributions aimed at improving the quality of care for all nursing home residents. PUBLIC HEALTH RELEVANCE: There has been much interest among policymakers and researchers alike in examining whether nonprofit nursing homes provide higher quality relative to their for-profit counterparts. By examining this relationship using a novel empirical strategy, this study provides an opportunity to improve the quality of care for the millions of Americans receiving care in the nursing home setting.