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The relationship between costs and quality in nonprofit nursing homes

  • Laura Di Giorgio

    ()

    (Institute of Economics (IdEP), University of Lugano, Switzerland; Institute for Health Metrics and Evaluation (IHME), University of Washington, Seattle, USA)

  • Massimo Filippini

    (Institute of Economics (IdEP), University of Lugano; ETH, Zurich, Switzerland)

  • Giuliano Masiero

    (Department of Engineering, University of Bergamo, Italy; Institute of Economics (IdEP), University of Lugano, Switzerland)

We investigate the relationship between costs and quality in nonprofit nursing homes, a key issue in the present context of cost containment measures. In accordance with the economic theory of production, we estimate a three-inputs total cost function for nursing home services using data from 45 nursing homes in Switzerland between 2006 and 2010. Quality is measured by means of clinical indicators regarding process and outcome derived from the Minimum Data Set. We consider both composite and single quality indicators. Contrary to previous studies, we use panel data and control for unobserved heterogeneity. This allows to capture nursing homes specific features that may explain differences in structural quality or costs levels. We find evidence that poor levels of quality regarding outcome, as measured by the prevalence of severe pain and weight loss, lead to higher costs. Our results are robust to quality endogeneity concerns.

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Paper provided by USI Università della Svizzera italiana in its series IdEP Economic Papers with number 1402.

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Length: 32 pages
Date of creation: Mar 2014
Date of revision:
Handle: RePEc:lug:wpidep:1402
Contact details of provider: Web page: https://www.bul.sbu.usi.ch

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