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Changing Economic Incentives in Long-Term Care

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  • R. Tamara Konetzka

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    (Department of Health Studies, University of Chicago, 5841 S. Maryland Avenue, MC2007, Chicago, IL 60637)

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    Abstract

    Just as managed care has changed utilization and incentives in other parts of health care, there is a whole set of incentives built around long-term care that really matter. For example, if nursing homes have a financial incentive to hospitalize people with certain health conditions, then in the long run they are not going to develop the programs and invest in the resources to treat those people in the facility. Instead they're going to use those resources to stay in business or to provide other types of care. And while we can assume that policymakers do not create regulations that they expect will lead to poor quality, efforts to increase access or efficiency sometimes have the unintended consequence of reducing quality. Health care sectors in which spending is rising particularly rapidly or in which access seems to be problematic may be prone to regulations that fail to take into account potential effects on quality. There's a lot of money spent on nursing homes; there's certainly a lot of interest from public funders in nursing homes; and nursing homes have a long history of quality-of-care problems. Not surprisingly, then, some of the most interesting sets of bad incentives for quality can be found in nursing homes.

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    Bibliographic Info

    Paper provided by Center for Policy Research, Maxwell School, Syracuse University in its series Center for Policy Research Policy Briefs with number 32.

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    Length: 35 pages
    Date of creation: Apr 2006
    Date of revision:
    Handle: RePEc:max:cprpbr:32

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    Keywords: nursing home; Medicare; Medicaid; long-term care; elderly; social welfare.;

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    1. Nyman, John A, 1994. "The Effects of Market Concentration and Excess Demand on the Price of Nursing Home Care," Journal of Industrial Economics, Wiley Blackwell, vol. 42(2), pages 193-204, June.
    2. David C. Grabowski & Jonathan Gruber, 2005. "Moral Hazard in Nursing Home Use," NBER Working Papers 11723, National Bureau of Economic Research, Inc.
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