IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/30228.html
   My bibliography  Save this paper

Producing Health: Measuring Value Added of Nursing Homes

Author

Listed:
  • Liran Einav
  • Amy Finkelstein
  • Neale Mahoney

Abstract

We develop a stylized model that allows us to estimate a value-added measure for nursing homes (“SNFs”) which accounts for patient selection both into and out of a SNF. We use the model, together with detailed data on the physical and mental health of about 6 million Medicare SNF patients between 2011 and 2016, to estimate the value added for about 14,000 distinct SNFs. We document substantial heterogeneity in value added. Nationwide, compared to a 10th percentile SNF, a 90th percentile SNF is able to discharge a patient at the same health level almost a week sooner, or one quarter of the median length of stay. Heterogeneity in value added within a market is almost as large as it is nationwide. Our results point to the potential for substantial gains through policies that encourage reallocation of patients to higher-quality SNFs within their market.

Suggested Citation

  • Liran Einav & Amy Finkelstein & Neale Mahoney, 2022. "Producing Health: Measuring Value Added of Nursing Homes," NBER Working Papers 30228, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:30228
    Note: AG EH IO PE PR
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w30228.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Atila Abdulkadiroğlu & Parag A. Pathak & Jonathan Schellenberg & Christopher R. Walters, 2020. "Do Parents Value School Effectiveness?," American Economic Review, American Economic Association, vol. 110(5), pages 1502-1539, May.
    2. Small, Kenneth A & Rosen, Harvey S, 1981. "Applied Welfare Economics with Discrete Choice Models," Econometrica, Econometric Society, vol. 49(1), pages 105-130, January.
    3. Johan Bring, 1995. "Variable importance by partitioningR 2," Quality & Quantity: International Journal of Methodology, Springer, vol. 29(2), pages 173-189, May.
    4. Amitabh Chandra & Amy Finkelstein & Adam Sacarny & Chad Syverson, 2016. "Health Care Exceptionalism? Performance and Allocation in the US Health Care Sector," American Economic Review, American Economic Association, vol. 106(8), pages 2110-2144, August.
    5. Koedel, Cory & Mihaly, Kata & Rockoff, Jonah E., 2015. "Value-added modeling: A review," Economics of Education Review, Elsevier, vol. 47(C), pages 180-195.
    6. Atul Gupta & Sabrina T Howell & Constantine Yannelis & Abhinav Gupta, 2021. "Does Private Equity Investment in Healthcare Benefit Patients? Evidence from Nursing Homes," Working Papers 2021-20, Becker Friedman Institute for Research In Economics.
    7. Dubin, Jeffrey A & McFadden, Daniel L, 1984. "An Econometric Analysis of Residential Electric Appliance Holdings and Consumption," Econometrica, Econometric Society, vol. 52(2), pages 345-362, March.
    8. Brian A. Jacob & Steven D. Levitt, 2003. "Rotten Apples: An Investigation of the Prevalence and Predictors of Teacher Cheating," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(3), pages 843-877.
    9. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-255, March-Apr.
    10. Martin B. Hackmann, 2019. "Incentivizing Better Quality of Care: The Role of Medicaid and Competition in the Nursing Home Industry," American Economic Review, American Economic Association, vol. 109(5), pages 1684-1716, May.
    11. Atul Gupta & Sabrina T Howell & Constantine Yannelis & Abhinav Gupta, 2024. "Owner Incentives and Performance in Healthcare: Private Equity Investment in Nursing Homes," The Review of Financial Studies, Society for Financial Studies, vol. 37(4), pages 1029-1077.
    12. Cornell, Portia Y. & Grabowski, David C. & Norton, Edward C. & Rahman, Momotazur, 2019. "Do report cards predict future quality? The case of skilled nursing facilities," Journal of Health Economics, Elsevier, vol. 66(C), pages 208-221.
    13. Edward P. Lazear, 2006. "Speeding, Terrorism, and Teaching to the Test," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 121(3), pages 1029-1061.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jonathan Gruber & David H. Howard & Jetson Leder-Luis & Theodore L. Caputi, 2023. "Dying or Lying? For-Profit Hospices and End of Life Care," NBER Working Papers 31035, National Bureau of Economic Research, Inc.
    2. Laura Battaglia & Timothy Christensen & Stephen Hansen & Szymon Sacher, 2024. "Inference for Regression with Variables Generated from Unstructured Data," Papers 2402.15585, arXiv.org, revised May 2024.
    3. Bär, Marlies & Bakx, Pieter & Wouterse, Bram & van Doorslaer, Eddy, 2022. "Estimating the health value added by nursing homes," Journal of Economic Behavior & Organization, Elsevier, vol. 203(C), pages 1-23.
    4. Bar, M.; & Bakx, P.; & Wouterse, B.; & van Doorslaer, Eddy.;, 2022. "Estimating the health value added by nursing homes," Health, Econometrics and Data Group (HEDG) Working Papers 22/12, HEDG, c/o Department of Economics, University of York.
    5. Jessie Bruhn & Christopher Campos & Eric Chen, 2023. "Who Benefits from Remote Schooling? Self-Selection and Match Effects," Working Papers 2023-004, Brown University, Department of Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Johannes S. Kunz & Carol Propper & Kevin E. Staub & Rainer Winkelmann, 2023. "Assessing the Quality of Public Services: For-profits, Chains, and Concentration in the Hospital Market," Papers 2023-01, Centre for Health Economics, Monash University.
    2. Bär, Marlies & Bakx, Pieter & Wouterse, Bram & van Doorslaer, Eddy, 2022. "Estimating the health value added by nursing homes," Journal of Economic Behavior & Organization, Elsevier, vol. 203(C), pages 1-23.
    3. Bar, M.; & Bakx, P.; & Wouterse, B.; & van Doorslaer, Eddy.;, 2022. "Estimating the health value added by nursing homes," Health, Econometrics and Data Group (HEDG) Working Papers 22/12, HEDG, c/o Department of Economics, University of York.
    4. Martin B. Hackmann & R. Vincent Pohl & Nicolas R. Ziebarth, 2024. "Patient versus Provider Incentives in Long-Term Care," American Economic Journal: Applied Economics, American Economic Association, vol. 16(3), pages 178-218, July.
    5. Dörte Heger & Annika Herr & Anne Mensen, 2022. "Paying for the view? How nursing home prices affect certified staffing ratios," Health Economics, John Wiley & Sons, Ltd., vol. 31(8), pages 1618-1632, August.
    6. Jessie Bruhn & Christopher Campos & Eric Chen, 2023. "Who Benefits from Remote Schooling? Self-Selection and Match Effects," Working Papers 2023-004, Brown University, Department of Economics.
    7. Kidokoro, Yukihiro, 2016. "A micro foundation for discrete choice models with multiple categories of goods," Journal of choice modelling, Elsevier, vol. 19(C), pages 54-72.
    8. Raja, Chandni, 2023. "How do hospitals respond to input regulation? Evidence from the California nurse staffing mandate," Journal of Health Economics, Elsevier, vol. 92(C).
    9. Mora Rodriguez, Jhon James, 2013. "Introduccion a la teoría del consumidor [Introduction to Consumer Theory]," MPRA Paper 48129, University Library of Munich, Germany, revised 08 Jul 2013.
    10. Nava Ashraf & James Berry & Jesse M. Shapiro, 2010. "Can Higher Prices Stimulate Product Use? Evidence from a Field Experiment in Zambia," American Economic Review, American Economic Association, vol. 100(5), pages 2383-2413, December.
    11. Mark D. Agee & Thomas D. Crocker, 2002. "On Techniques to Value the Impact of Environmental Hazards on Children's Health," NCEE Working Paper Series 200208, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Sep 2002.
    12. Amitabh Chandra & Courtney Coile & Corina Mommaerts, 2023. "What Can Economics Say about Alzheimer's Disease?," Journal of Economic Literature, American Economic Association, vol. 61(2), pages 428-470, June.
    13. Robert Ainsworth & Rajeev Dehejia & Cristian Pop-Eleches & Miguel Urquiola, 2020. "Information, Preferences, and Household Demand for School Value Added," NBER Working Papers 28267, National Bureau of Economic Research, Inc.
    14. Stephen P. Holland & Erin T. Mansur & Nicholas Z. Muller & Andrew J. Yates, 2015. "Environmental Benefits from Driving Electric Vehicles?," NBER Working Papers 21291, National Bureau of Economic Research, Inc.
    15. Sofia Berto Villas‐Boas, 2009. "An empirical investigation of the welfare effects of banning wholesale price discrimination," RAND Journal of Economics, RAND Corporation, vol. 40(1), pages 20-46, March.
    16. Nicholas Economides & Katja Seim & V. Brian Viard, 2008. "Quantifying the benefits of entry into local phone service," RAND Journal of Economics, RAND Corporation, vol. 39(3), pages 699-730, September.
    17. Jingyi Wang & Jing Guan & Guojun Wang, 2023. "Impact of long‐term care insurance on the health status of middle‐aged and older adults," Health Economics, John Wiley & Sons, Ltd., vol. 32(3), pages 558-573, March.
    18. Mathias Dewatripont & Jean Tirole, 2022. "The Morality of Markets," Working Papers ECARES 2022-35, ULB -- Universite Libre de Bruxelles.
    19. Propper, Carol & Kunz, Johannes & Staub, Kevin & Winkelmann, Rainer, 2020. "Assessing the Quality of Public Services: Does Hospital Competition Crowd Out the For-Profit Quality Gap?," CEPR Discussion Papers 15045, C.E.P.R. Discussion Papers.
    20. Atul Gupta & Sabrina T Howell & Constantine Yannelis & Abhinav Gupta, 2021. "Does Private Equity Investment in Healthcare Benefit Patients? Evidence from Nursing Homes," Working Papers 2021-20, Becker Friedman Institute for Research In Economics.

    More about this item

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L8 - Industrial Organization - - Industry Studies: Services
    • L88 - Industrial Organization - - Industry Studies: Services - - - Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:30228. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.