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Are Recessions Good for Staffing in Nursing Homes?

Author

Listed:
  • R. Tamara Konetzka

    (Department of Public Health Sciences, University of Chicago)

  • Karen B. Lasater

    (Center for Health Outcomes and Policy Research, School of Nursing, University of Pennsylvania)

  • Edward C. Norton

    (Department of Health Management and Policy and Department of Economics, University of Michigan, and NBER)

  • Rachel M. Werner

    (Division of General Internal Medicine and Leonard Davis Institute of Health Economics, University of Pennsylvania Author email: rwerner@upenn.edu)

Abstract

The quality and cost of care in nursing homes depend critically on the number and types of nurses. Recent research suggests that the nursing supply adjusts to macroeconomic conditions. However, prior work has failed to consider the effect of macroeconomic conditions on demand for nurses through the effect on revenues. We test how county-level unemployment rates affect direct-care staffing rates in nursing homes using California data. We exploit the wide variation in the unemployment rates across counties and over time in 2005–12. We also test whether there are heterogeneous effects of unemployment rates by facility size, staffing level, and profit status. We find that as unemployment rates increase, staffing by registered nurses (RNs) decreases but staffing by licensed practical nurses (LPNs) increases. The increase in LPNs is larger in large nursing homes, nursing homes with higher staffing levels, and in for-profit nursing homes. We also find that as unemployment rates increase, nursing home revenue decreases. While the effect of macroeconomic conditions on nursing supply may be important for cost and quality of care, the mechanism is not simple, direct, or homogeneous for all types of nurses and nursing homes.

Suggested Citation

  • R. Tamara Konetzka & Karen B. Lasater & Edward C. Norton & Rachel M. Werner, 2018. "Are Recessions Good for Staffing in Nursing Homes?," American Journal of Health Economics, MIT Press, vol. 4(4), pages 411-432, Fall.
    • Handle: RePEc:tpr:amjhec:v:4:y:2018:i:4:p:411-432
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    More about this item

    Keywords

    recessions; business cycles; nursing homes; nurses;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • L84 - Industrial Organization - - Industry Studies: Services - - - Personal, Professional, and Business Services

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