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Effect of nursing home ownership on the quality of post-acute care: An instrumental variables approach

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  • Grabowski, David C.
  • Feng, Zhanlian
  • Hirth, Richard
  • Rahman, Momotazur
  • Mor, Vincent
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    Abstract

    Given the preferential tax treatment afforded nonprofit firms, policymakers and researchers have been interested in whether the nonprofit sector provides higher nursing home quality relative to its for-profit counterpart. However, differential selection into for-profits and nonprofits can lead to biased estimates of the effect of ownership form. By using “differential distance” to the nearest nonprofit nursing home relative to the nearest for-profit nursing home, we mimic randomization of residents into more or less “exposure” to nonprofit homes when estimating the effects of ownership on quality of care. Using national Minimum Data Set assessments linked with Medicare claims, we use a national cohort of post-acute patients who were newly admitted to nursing homes within an 18-month period spanning January 1, 2004 and June 30, 2005. After instrumenting for ownership status, we found that post-acute patients in nonprofit facilities had fewer 30-day hospitalizations and greater improvement in mobility, pain, and functioning.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Health Economics.

    Volume (Year): 32 (2013)
    Issue (Month): 1 ()
    Pages: 12-21

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    Handle: RePEc:eee:jhecon:v:32:y:2013:i:1:p:12-21

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    Web page: http://www.elsevier.com/locate/inca/505560

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    Keywords: Ownership; Nursing homes; Quality; Post-acute care;

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    References

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    1. Mark Duggan, 2002. "Hospital Market Structure and the Behavior of Not-For-Profit Hospitals," RAND Journal of Economics, The RAND Corporation, vol. 33(3), pages 433-446, Autumn.
    2. Robert Town & Roger Feldman & Douglas Wholey, 2004. "The Impact of Ownership Conversions on HMO Performance," International Journal of Health Care Finance and Economics, Springer, Springer, vol. 4(4), pages 327-342, December.
    3. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, Econometric Society, vol. 65(3), pages 557-586, May.
    4. Terza, Joseph V. & Basu, Anirban & Rathouz, Paul J., 2008. "Two-stage residual inclusion estimation: Addressing endogeneity in health econometric modeling," Journal of Health Economics, Elsevier, Elsevier, vol. 27(3), pages 531-543, May.
    5. Cawley, John & Grabowski, David C. & Hirth, Richard A., 2006. "Factor substitution in nursing homes," Journal of Health Economics, Elsevier, Elsevier, vol. 25(2), pages 234-247, March.
    6. Grabowski, David C. & Hirth, Richard A., 2003. "Competitive spillovers across non-profit and for-profit nursing homes," Journal of Health Economics, Elsevier, Elsevier, vol. 22(1), pages 1-22, January.
    7. Newhouse, Joseph P, 1970. "Toward a Theory of Nonprofit Institutions: An Economic Model of a Hospital," American Economic Review, American Economic Association, American Economic Association, vol. 60(1), pages 64-74, March.
    8. Edward C. Norton & Douglas O. Staiger, 1994. "How Hospital Ownership Affects Access to Care for the Uninsured," RAND Journal of Economics, The RAND Corporation, vol. 25(1), pages 171-185, Spring.
    9. Joseph J. Doyle, 2011. "Returns to Local-Area Health Care Spending: Evidence from Health Shocks to Patients Far from Home," American Economic Journal: Applied Economics, American Economic Association, vol. 3(3), pages 221-43, July.
    10. Karen Eggleston & Yu-Chu Shen & Joseph Lau & Christopher H. Schmid & Jia Chan, 2008. "Hospital ownership and quality of care: what explains the different results in the literature?," Health Economics, John Wiley & Sons, Ltd., vol. 17(12), pages 1345-1362.
    11. Sloan, Frank A., 2000. "Not-for-profit ownership and hospital behavior," Handbook of Health Economics, Elsevier, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 21, pages 1141-1174 Elsevier.
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    Cited by:
    1. Richard Hirth & David Grabowski & Zhanlian Feng & Momotazur Rahman & Vincent Mor, 2014. "Effect of nursing home ownership on hospitalization of long-stay residents: an instrumental variables approach," International Journal of Health Care Finance and Economics, Springer, Springer, vol. 14(1), pages 1-18, March.
    2. Bowblis, John R. & McHone, Heather S., 2013. "An instrumental variables approach to post-acute care nursing home quality: Is there a dime's worth of evidence that continuing care retirement communities provide higher quality?," Journal of Health Economics, Elsevier, Elsevier, vol. 32(5), pages 980-996.
    3. Martin, Cécile, 2014. "Concurrence, prix et qualité de la prise en charge en EHPAD en France : Analyses micro-économétriques," Economics Thesis from University Paris Dauphine, Paris Dauphine University, Paris Dauphine University, number 123456789/13712 edited by Dormont, Brigitte.

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