Certificate-Of-Need Regulation and Healthcare Service Quality: Evidence from the Nursing Home Industry

Associations Between Certificate of Need Policies and Hospice Quality Outcomes

BACKGROUND

Certificate of need (CON) laws are state-based regulations requiring approval of new healthcare entities and capital expenditures. Varying by state, these regulations impact hospices in 14 states and DC, with several states re-examining provisions.

AIM

This cross-sectional study examined the association of CON status on hospice quality outcomes using the hospice item set metric (HIS).

DESIGN

Data from the February 2022 Medicare Hospice Provider and General Information reports of 4870 US hospices were used to compare group means of the 8 HIS measures across CON status. Multiple regression analysis was used to predict HIS outcomes by CON status while controlling for ownership and size.

RESULTS

Approximately 86% of hospices are in states without a hospice CON provision. The unadjusted mean HIS scores for all measures were higher in CON states (M range 94.40-99.59) than Non-CON (M range 90.50-99.53) with significant differences in all except treatment preferences. In the adjusted model, linear regression analyses showed hospice CON states had significantly higher HIS ratings than those from Non-CON states for beliefs and values addressed (β = .05, P = .009), pain assessment (β = .05, P = .009), dyspnea treatment (β = .08, P < .001) and the composite measure (β = .09, P < .001). Treatment preferences, pain screening, dyspnea screening, and opioid bowel treatment were not statistically significant (P > .05).

CONCLUSION

The study suggests that CON regulations may have a modest, but beneficial impact on hospice-reported quality outcomes, particularly for small and medium-sized hospices. Further research is needed to explore other factors that contribute to HIS outcomes.

Nursing Homes: Affiliation to Large Chains, Quality and Public–Private Collaboration

The objective of this paper was to estimate the influence of being affiliated with an NH chain on perceived consumer quality, and whether this relationship is affected by maintaining a collaboration agreement with public administrations. We used a combination of theoretical foundations: (1) From the consumer perspective, we focussed on online reviews of the quality of nursing homes (NHs); (2) from the industrial organisation literature, we proposed arguments regarding the advantages and disadvantages of belonging to a chain; (3) the theory of transaction costs was used to explain public–private collaboration. The study was carried out on a sample of 642 chain-affiliated Spanish NHs, with data from quality scores downloaded from the website topMayores.es. We distinguished between the six largest chains and the rest. We applied linear regression models. The results show that NHs affiliated with one of the largest NH chains obtained worse quality scores in the assessment made by users, although quality scores improved for the largest chains of NHs involved in an agreement with the public administration.

The Effects of Certificate-of-Need Laws on the Quality of Hospital Medical Services

Certificate-of-need (CON) laws restrict entry into health services by requiring healthcare providers to seek approval from state healthcare regulators before making any major capital expenditures. An important question is whether CON laws influence the quality of medical services in CON law states. For instance, if CON laws actually lower the quality of medical services, they fail to achieve their intended effect. This paper tests the hypothesis that hospitals in states with CON laws provide lower-quality services than hospitals in states without CON laws. Our overall results suggest that CON regulations lead to lower-quality care for some quality measures and have little or no effect on other quality standards. The results remain consistent across several robustness tests.

Skilled Nursing Facility Organizational Characteristics Are More Strongly Associated With Multiparticipant Therapy Provision Than Patient Characteristics

OBJECTIVES

Multiparticipant physical and occupational therapy provision has fluctuated significantly in skilled nursing facilities (SNFs) under shifts in Medicare reimbursement policy. Multiparticipant therapy includes group (2-6 individuals per therapist) and concurrent therapy (2 individuals per therapist). This study uses recent patient-level data to characterize multiparticipant therapy provision in SNFs to help anticipate shifts under new Medicare policy and the COVID-19 pandemic.

METHODS

This secondary analysis used data on 1,016,984 post-acute rehabilitation stays in SNFs in 2018. This analysis identified patient predictors (eg, demographic, clinical) and organizational predictors (eg, ownership, quality, staffing) of receiving multiparticipant therapy using mixed-effects logistic regression. Among individuals who received any multiparticipant therapy, those patient or facility factors associated with high rates of multiparticipant therapy provision were also determined.

RESULTS

Less than 3% of individuals received multiparticipant therapy in 2018. Patient functional and cognitive impairment and indicators of market regulation were associated with lower odds of multiparticipant therapy. Effect sizes for organizational factors associated with multiparticipant therapy provision were generally larger compared with patient factors. High multiparticipant therapy provision was concentrated in <2% of SNFs and was positively associated with for-profit ownership, contract staffing, and low 5-star quality ratings.

CONCLUSION

SNF organizational characteristics tended to have stronger associations with multiparticipant therapy provision than patient factors, suggesting that changes in patient case-mix, as expected during the COVID-19 pandemic, may have less of an impact on multiparticipant therapy provision than organizational factors. Results suggest that for-profit SNFs in states with higher market regulation, SNFs providing high volumes of therapy, and SNFs utilizing high proportions of assistants and contract staff may be more responsive to Medicare policy by increasing multiparticipant therapy provision.

IMPACT

This study may help identify SNFs that are more likely to increase multiparticipant therapy provision under new Medicare payment policy.

The Economics of a Bed Shortage: Certificate-of-Need Regulation and Hospital Bed Utilization during the COVID-19 Pandemic

Certificate-of-need (CON) laws are intended to restrain health care spending by limiting the acquisition of duplicative capital and the initiation of unnecessary services. Critics contend that need is difficult to objectively assess, especially considering the risks and uncertainty inherent in health care. We compare statewide bed utilization rates and hospital-level bed utilization rates in bed CON and non-bed CON states during the COVID-19 pandemic. Controlling for other possibly confounding factors, we find that states with bed CONs had 12 percent higher bed utilization rates and 58 percent more days in which more than 70 percent of their beds were used. Individual hospitals in bed CON states were 27 percent more likely to utilize all of their beds. States that relaxed CON requirements to make it easier for hospitals to meet the surge in demand did not experience any statistically significant decreases in bed utilization or number of days above 70 percent of capacity. Nor were hospitals in states that relaxed their CON requirements any less likely to use all their beds. Certificate-of-need laws seem to have exacerbated the risk of running out of beds during the COVID-19 pandemic. State efforts to relax these rules had little immediate effect on reducing this risk.

Nursing Home Competition, Prices and Quality: A Scoping Review and Policy Lessons

BACKGROUND AND OBJECTIVES

In recent years, countries have increasingly relied on markets to improve efficiency, contain costs, and maintain quality in aged care. Under the right conditions, competition can spur providers to compete by offering better prices and higher quality of services. However, in aged care, market failures can be extensive. Information about prices and quality may not be readily available and search costs can be high. This study undertakes a scoping review on competition in the nursing home sector, with an emphasis on empirical evidence in relation to how competition affects prices and quality of care.

RESEARCH DESIGN AND METHODS

Online databases were used to identify studies published in English language between 1988 and 2020. A total of 50 studies covering nine countries are reviewed.

RESULTS

The review finds conflicting evidence on the relationship between competition and quality. Some studies find greater competition leading to higher quality, others find the opposite. Institutional features such as the presence of binding supply restrictions on nursing homes and public reporting of quality information are important considerations. Most studies find greater competition tends to result in lower prices, although the effect is small.

DISCUSSION AND IMPLICATIONS

The literature offers several key policy lessons, including the relationship between supply restrictions and quality which has implications on whether increasing subsidies can result in higher quality and the importance of price transparency and public reporting of quality.