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Consumer Response to Composite Ratings of Nursing Home Quality

Author

Listed:
  • Marcelo Coca Perraillon

    (Department of Health Systems, Management, and Policy, University of Colorado, Anschutz Medical Campus)

  • R. Tamara Konetzka

    (Department of Public Health Sciences, University of Chicago)

  • Daifeng He

    (Department of Economics, Swarthmore College)

  • Rachel M. Werner

    (University of Pennsylvania)

Abstract

Health-care report cards are intended to address information asymmetries and enable consumers to choose providers of better quality. However, the form of the information may matter to consumers. Nursing Home Compare, a website that publishes report cards for nursing homes, went from publishing a large set of indicators to a composite rating in which nursing homes are assigned one to five stars. We evaluate whether the simplified ratings motivated consumers to choose better-rated nursing homes. We use a regression discontinuity design to estimate changes in new admissions six months after the publication of the ratings. Our main results show that nursing homes that obtained an additional star gained more admissions, with heterogeneous effects depending on baseline number of stars. We conclude that the form of quality reporting matters to consumers, and that the increased use of composite ratings is likely to increase consumer response.

Suggested Citation

  • Marcelo Coca Perraillon & R. Tamara Konetzka & Daifeng He & Rachel M. Werner, 2019. "Consumer Response to Composite Ratings of Nursing Home Quality," American Journal of Health Economics, MIT Press, vol. 5(2), pages 165-190, Spring.
    • Handle: RePEc:tpr:amjhec:v:5:y:2019:i:2:p:165-190
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    References listed on IDEAS

    as
    1. David Dranove & Mark A. Satterthwaite, 1992. "Monopolistic Competition When Price and Quality are Imperfectly Observable," RAND Journal of Economics, The RAND Corporation, vol. 23(4), pages 518-534, Winter.
    2. 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 Economics and Management, Springer, vol. 14(1), pages 1-18, March.
    3. Imbens, Guido W. & Lemieux, Thomas, 2008. "Regression discontinuity designs: A guide to practice," Journal of Econometrics, Elsevier, vol. 142(2), pages 615-635, February.
    4. Andrew Gelman & Guido Imbens, 2019. "Why High-Order Polynomials Should Not Be Used in Regression Discontinuity Designs," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 37(3), pages 447-456, July.
    5. Grabowski, David C. & Feng, Zhanlian & Hirth, Richard & Rahman, Momotazur & Mor, Vincent, 2013. "Effect of nursing home ownership on the quality of post-acute care: An instrumental variables approach," Journal of Health Economics, Elsevier, vol. 32(1), pages 12-21.
    6. Daifeng He & R. Tamara Konetzka, 2015. "Public Reporting and Demand Rationing: Evidence from the Nursing Home Industry," Health Economics, John Wiley & Sons, Ltd., vol. 24(11), pages 1437-1451, November.
    7. Werner, Rachel M. & Norton, Edward C. & Konetzka, R. Tamara & Polsky, Daniel, 2012. "Do consumers respond to publicly reported quality information? Evidence from nursing homes," Journal of Health Economics, Elsevier, vol. 31(1), pages 50-61.
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    Cited by:

    1. Christopher S. Brunt, 2023. "Assessing the impact of enforcement and compliance with minimum staffing standards on the quality of care in nursing homes: Evidence from the Centers for Medicare and Medicaid Services' staff star rat," Health Economics, John Wiley & Sons, Ltd., vol. 32(2), pages 235-276, February.
    2. Kim, Tami & Martin, Daniel, 2021. "What do consumers learn from regulator ratings? Evidence from restaurant hygiene quality disclosures," Journal of Economic Behavior & Organization, Elsevier, vol. 185(C), pages 234-249.
    3. Cutler, Henry & Gu, Yuanyuan & Bilgrami, Anam & Partington, Andrew, 2023. "The 2021 proposal to increase market forces in the Australian residential aged-care sector," Health Policy, Elsevier, vol. 127(C), pages 60-65.

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    More about this item

    Keywords

    report cards; quality; star rating; nursing home; regression discontinuity;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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