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Quality-Adjusted Cost Functions and Policy Evaluation in the Nursing Home Industry

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Author Info
Gertler, Paul J
Waldman, Donald M

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Abstract

Proper evaluation of cost-quality trade-offs inherent in regulatory policy requires identifying the structure of production from the behavioral response of quality to the policy change. However, estimating the structure of production with endogenous quality is difficult because of both measurement problems and data availability. The authors develop a simple method for identifying and estimating cost functions in the presence of endogenous and unobserved quality. Using this method, they estimate that a quality-adjusted cost function for nursing homes treating quality as exogenous yields seriously misleading estimates of marginal cost and economies of scale. Copyright 1992 by University of Chicago Press.

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Publisher Info
Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 100 (1992)
Issue (Month): 6 (December)
Pages: 1232-56
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Handle: RePEc:ucp:jpolec:v:100:y:1992:i:6:p:1232-56

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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)
  1. David M. Blau & H. Naci Mocan, 1999. "The Supply of Quality in Child Care Centers," NBER Working Papers 7225, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Kathleen Carey & James F. Burgess, 1999. "On measuring the hospital cost|quality trade-off," Health Economics, John Wiley & Sons, Ltd., vol. 8(6), pages 509-520.
  3. Sherman Folland, 2005. "The Quality of Mercy: Social Health Insurance in the Charitable Liberal State," International Journal of Health Care Finance and Economics, Springer, vol. 5(1), pages 23-46, January. [Downloadable!] (restricted)
  4. Eric W. Christensen, 2004. "Scale and scope economies in nursing homes: A quantile regression approach," Health Economics, John Wiley & Sons, Ltd., vol. 13(4), pages 363-377. [Downloadable!]
  5. Magnus Lindelow, 2004. "Understanding spatial variation in the utilization of health," Development and Comp Systems 0409058, EconWPA. [Downloadable!]
  6. Prufer, J., 2007. "Competition and Mergers among Nonprofits," Discussion Paper 2007-022, Tilburg University, Tilburg Law and Economic Center. [Downloadable!]
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  7. David C. Grabowski & Jonathan Gruber & Joseph J. Angelelli, 2006. "Nursing Home Quality as a Public Good," NBER Working Papers 12361, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Eddy Adang, 2008. "Economic evaluation of innovative technologies in health care should include a short-run perspective," The European Journal of Health Economics, Springer, vol. 9(4), pages 381-384, November. [Downloadable!] (restricted)
  9. Robert Rosenman & Daniel Friesner & Christopher Stevens, 2005. "Do Health Care Providers Quality Discriminate? Empirical Evidence from Primary Care Outpatient Clinics," Eastern Economic Journal, Eastern Economic Association, vol. 31(4), pages 649-670, Fall. [Downloadable!]
  10. Elamin H. Elbasha & Mark L. Messonnier, 2004. "Cost-effectiveness analysis and health care resource allocation: decision rules under variable returns to scale," Health Economics, John Wiley & Sons, Ltd., vol. 13(1), pages 21-35. [Downloadable!]
  11. Cao, Kay & Johnson, Robin, 2006. "The Costs and Benefits of Introducing Mandatory Hygiene Regulations," 2006 Conference, August 24-25, 2006, Nelson, New Zealand 31976, New Zealand Agricultural and Resource Economics Society. [Downloadable!]
  12. Flipo, Anne & Fougère, Denis & Olier, Lucile, 2004. "Is the Household Demand for In-Home Services Sensitive to Tax Reductions? The French Case," IZA Discussion Papers 1392, Institute for the Study of Labor (IZA). [Downloadable!]
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  13. John A. Romley & Dana Goldman, 2008. "How Costly Is Hospital Quality? A Revealed-Preference Approach," NBER Working Papers 13730, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  14. H. Naci Mocan, 1995. "The Child Care Industry: Cost Functions, Efficiency, and Quality," NBER Working Papers 5293, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  15. Darius Lakdawalla & Tomas Philipson, 1999. "Aging and the Growth of Long-Term Care," NBER Working Papers 6980, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  16. David Rosenbaum & Charles Lamphear & Ken Rebeck, 2001. "The Effects of Acuity and Utilization on Nursing Home Costs," Review of Industrial Organization, Springer, vol. 19(3), pages 279-294, November. [Downloadable!] (restricted)
  17. Dan Friesner & Robert Rosenman, 2004. "Non-profit cost-adjusting with quality as a private good," Applied Economics, Taylor and Francis Journals, vol. 36(5), pages 511-523, March. [Downloadable!] (restricted)
  18. Tong Li & Robert Rosenman, 2001. "Estimating hospital costs with a generalized Leontief function," Health Economics, John Wiley & Sons, Ltd., vol. 10(6), pages 523-538. [Downloadable!]
  19. Andrew Worthington, 1999. "An Empirical Survey Of Frontier Efficiency Measurement Techniques In Healthcare Services," School of Economics and Finance Discussion Papers and Working Papers Series 067, School of Economics and Finance, Queensland University of Technology. [Downloadable!]
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