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Are Recessions Good for Staffing in Nursing Homes?

Listed author(s):
  • R. Tamara Konetzka
  • Karen B. Lasater
  • Edward C. Norton
  • Rachel M. Werner

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 2005–2012. 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.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 23402.

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Date of creation: May 2017
Handle: RePEc:nbr:nberwo:23402
Note: HC HE
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  1. Reagan A. Baughman & Kristin E. Smith, 2012. "Labor Mobility Of The Direct Care Workforce: Implications For The Provision Of Long‐Term Care," Health Economics, John Wiley & Sons, Ltd., vol. 21(12), pages 1402-1415, December.
  2. Cohen, Joel W. & Spector, William D., 1996. "The effect of Medicaid reimbursement on quality of care in nursing homes," Journal of Health Economics, Elsevier, vol. 15(1), pages 23-48, February.
  3. Emanuela Antonazzo & Anthony Scott & Diane Skatun & Robert. F. Elliott, 2003. "The labour market for nursing: a review of the labour supply literature," Health Economics, John Wiley & Sons, Ltd., vol. 12(6), pages 465-478.
  4. Yaa Akosa Antwi & John R. Bowblis, 2016. "The Impact of Nurse Turnover on Quality of Care and Mortality in Nursing Homes: Evidence from the Great Recession," Upjohn Working Papers and Journal Articles 16-249, W.E. Upjohn Institute for Employment Research.
  5. Cawley, John & Grabowski, David C. & Hirth, Richard A., 2006. "Factor substitution in nursing homes," Journal of Health Economics, Elsevier, vol. 25(2), pages 234-247, March.
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