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Ownership type is an important factor in determining nursing home outcomes

Recent research offers new insights into the differences between nonprofit and for-profit nursing homes. Prior studies have shown that nonprofit nursing homes have higher staff-to-resident ratios and higher expenditures per resident generally. A study by researchers at the Agency for Health Care Policy and Research more directly compares the quality of care provided by for-profit and nonprofit nursing homes by using risk-adjusted outcome measures including number of infections, pressure ulcers, change in functioning, hospitalizations, and death. The authors also assessed whether different types of residents reside in nonprofit and for-profit facilities. Finally, the authors assessed the impact of market factors on resident outcomes.

AHCPR researchers William D. Spector, Ph.D., Thomas M. Selden, Ph.D., and Joel W. Cohen, Ph.D., using data from the Institutional Population Component of the 1987 National Medical Expenditure Survey (NMES), determined that ownership type had a much greater effect on the outcomes of private-pay residents than Medicaid residents. For example, private-pay residents in nonprofit homes faced a 6.2 percent lower probability of death and 6.3 percent lower probability of infection than private-pay residents in for-profit homes. For Medicaid residents, the effect of ownership type was negligible with the exception of lower hospitalization rates in for-profit facilities.

The authors also found that nonprofit nursing homes generally were most likely to attract residents who had the highest costs for monitoring quality, placed the greatest weight on quality, and faced the fewest constraints in their choice of nursing homes. Finally, the authors found little influence of market-level variables on outcomes. No evidence was found to support either the hypothesis that high nonprofit market share enables nonprofit facilities to maintain high quality levels, or the more recent conjecture that increased nonprofit market share raises quality in the for-profit segment of the market.

The authors emphasize that there have been many changes in the nursing home market since these data were collected in 1987. In particular, the researchers note that the passage of the Omnibus Budget Reconciliation Act of 1987—which imposed higher minimum staffing levels, among many other changes—may have reduced differences in quality of care between for-profit and nonprofit facilities since that time. They cite the need for further research with more current data to determine whether the results found for 1987 hold in the current nursing home market.

For more details, see "The impact of ownership type on nursing home outcomes," by Drs. Spector, Selden, and Cohen, in Health Economics 7, pp. 639-653, 1998.

Reprints (AHCPR Publication No. 99-R026) are available from the AHCPR Publications Clearinghouse.

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