Ultimately, the policy goal of health care report cards is to improve the quality of care. Previous research has found that nursing home report cards generally have a modest effect on nursing home performance. Similarly, we found very little evidence to suggest that the staggered introduction of the NHQI report card measures led to increased patient demand or better long-stay quality. However, we found that nursing homes residing in more competitive markets improved their reported quality more than facilities in less competitive markets.
The idea that market-oriented solutions such as report cards work best in more competitive markets is somewhat intuitive. Indeed, Nursing Home Compare was designed with the goal of harnessing “market forces to encourage poorly performing homes to improve quality or face the loss of revenue” (U.S. General Accounting Office 2002
, p. 3). In the 1970s and 1980s, the nursing home market was not very competitive due to certificate-of-need regulations, which impeded new entry and created an “excess demand” for services in many local markets (Scanlon 1980
). However, occupancy rates have greatly declined over the past two decades due to the emergence of assisted living and the growth of Medicaid home- and community-based services. Our results support more recent studies suggesting “markets matter” in nursing home care (Grabowski 2008
In spite of the growing role of competition in the nursing home sector, considerable variation still exists in the degree of competition across local markets. If public reporting is less effective for facilities with greater market power, report cards alone may not be sufficient to encourage improved nursing home performance in certain parts of the country. In the absence of other initiatives, report cards may even magnify the disparities in care across facilities (Miller 2006
). If only better informed, higher socioeconomic residents use report cards in the more competitive markets, then report cards have the potential to widen the gulf between the “haves” and “have nots” in the nursing home sector. From a policy perspective, report cards may be best utilized as one of several initiatives to encourage improved performance across the full distribution of facilities.
A key feature of this paper relative to some of the previous studies in the literature is our analysis of the long-stay nursing home report card measures. As background, long-stay nursing home care is often paid for by Medicaid, while short-stay care is typically paid by Medicare. Although some specialization exists across facilities, the majority of nursing homes care for both short-stay and long-stay residents. Most of the research documenting poor nursing home quality has been among the long-stay population (Institute of Medicine 2001
). To the extent previous research has found an effect of Nursing Home Compare, it has largely been among the short-stay quality measures (e.g., Werner et al. 2009b
). Given that Medicare residents are associated with higher profit margins relative to Medicaid residents (Troyer 2002
; Medicare Payment Advisory Commission 2005
), the greater responsiveness to the short-stay quality report card measures is not surprising.
Recent developments with the Nursing Home Compare website have blurred the distinction between long-stay and short-stay quality measures in the report cards. Beginning in December 2008, the Nursing Home Compare website now reports four new composite quality measures for each nursing home, an overall five-star rating along with specific five-star ratings for inspections (deficiencies), staffing, and the MDS-based QIs. In constructing the MDS-based score, the short-stay and long-stay quality measures are combined. Obviously, this development has simplified the presentation of information on the website for consumers. Under the previous system, nursing home consumers may not have been able to interpret multiple, often conflicting, quality measures within a facility's report card. However, the shift to the five-star system may mask or distort the heterogeneity of facilities in their reported quality, especially among short-stay and long-stay residents. Importantly, Nursing Home Compare will still allow consumers to link on the website to the specific short-stay and long-stay QIs, but in practice, it is possible that consumers may choose to focus only on the global five-star ratings. Moving forward, it will be important to determine whether the gains to consumers from simplifying the quality report cards outweigh the potential costs of presenting homogeneous quality information to heterogeneous consumers. Ultimately, the five-star system may have positive implications for long-stay quality due to positive spillovers from facility's responsiveness to short-stay consumers, but negative implications for short-stay quality due to the lack of responsiveness to long-stay consumers.
Several potential limitations exist with our analysis. First, we acknowledge that the results generated in – are based on the assumptions that the pilot and nonpilot states were relatively similar and nursing homes in the control group (nonpilot states) were unaffected by the NHQI pilot. Second, it is possible that the NHQI mattered for other types of facilities beyond those in more competitive markets. We did not find large differences across facilities in terms of their share of private-pay residents (see Table SA1) or their occupancy at baseline (see ), but it is possible that other attributes may explain facility responsiveness to nursing home quality. Finally, the media attention around the NHQI makes it somewhat unique relative to the introduction and use of the typical nursing home report card. Thus, the results generated here may be somewhat different relative to other initiatives.
With the recent implementation of the five-star initiative and the evolving nature of competition in the long-term care sector, future work needs to continue to monitor the role of Nursing Home Compare toward influencing quality of care. However, this paper suggests quality report cards alone may not improve nursing home performance.