The market for long-term care services

Effects of Nursing Home Closures on Occupancy and Finances of Nearby Nursing Homes

This study estimates the effect of nursing home closure on occupancy, net profit margin, and operating margin of nearby nursing homes. We use national nursing home data from 2009 to 2019 from Medicare cost reports, Medicare Provider of Services (POS), and LTCfocus.org data. Using the Callaway and Sant'Anna difference-in-differences model, we compare the changes in occupancy, net profit margin, and operating margin between incumbent nursing homes in markets with any closure and nursing homes in markets without a closure, overall, and across rurality. Our findings suggest that nursing home closure improves the occupancy rates of remaining nursing homes in the same market in rural areas but there is little evidence of effects in metropolitan and micropolitan areas. Nursing home regulators and local officials should consider the long-term care market heterogeneity when considering interventions targeted at nursing home closure.

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 the English language between 1988 and 2020. A total of 50 studies covering 9 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.

A critique of the marketisation of long-term residential and nursing home care

Long-term care systems across countries within the Organisation for Economic Co-operation and Development have undergone a progressive marketisation and financialisation in recent decades, characterised by the embedding of neoliberal market values such as competition, consumer choice, and the profit motive. In this Personal View, we argue that these make poor guiding principles for the care sector, identifying the dysfunctional dynamics that arise as a result, and reflecting on the clinical implications of each, with a focus on facility-based care. We outline why providers can scarcely respond to competitive forces without compromising care quality. We explain why the promotion of consumer choice cannot effectively motivate improvements to quality of care. And we explore how privatisation opens the door to predatory financial practices. We conclude by considering how far proposals for reform can take us, ultimately arguing for a rejection of neoliberal market ideology, and calling for sector-wide discussions about what principles would be more fitting for a caring economy.

Secret Shopper Data on Private Prices in the Nursing Home Industry From 2008 to 2010

Nationwide nursing home private-pay prices at the facility-level have not been available for researchers interested in studying this unique health care market. This study presents a new data source, Caregiverlist, for private-pay prices for private and semiprivate rooms for 12,000 nursing homes nationwide collected between 2008 and 2010. We link these data to publicly available national nursing home-level data sets to examine the relationship between price and nursing home characteristics. We also compare private-pay prices with average private-pay revenues per day for California nursing homes obtained from facilities' financial filings. On average, private-pay prices were $224 per day for private rooms compared with $197 per day for semiprivate rooms. We find that nursing homes that are nonprofit, urban, hospital-based, have a special care unit, chain-owned, and have higher quality ratings have higher prices. We find average revenues per day in California to be moderately correlated with prices reported by Caregiverlist.

The Determinants and Variation of Nursing Home Private-Pay Prices: Organizational and Market Structure

Nursing home (NH) care is arguably the most significant financial risk faced by the elderly without long-term care insurance or Medicaid coverage. Annual out-of-pocket expenditures for NH care can easily exceed $70,000. However, our understanding of private-pay prices is limited by data availability. Utilizing a unique data set on NH prices from 2005 through 2010 across eight states, we find that NH price growth has consistently outpaced growth in consumer and medical care prices. After adjusting for geographical and facility differences, for-profit chains charge the lowest prices, independently operated for-profit and nonprofit NHs have similar prices, and nonprofit chains charge the highest prices. Adjusted prices are also likely to be higher when NHs have higher occupancy rates and markets are more concentrated. The significant differences in price across organizational and market structures suggest private-pay prices can be an important factor when evaluating and comparing the value of NH care.

Increasing Prevalence of Assisted Living as a Substitute for Private-Pay Long-Term Nursing Care

OBJECTIVE

Given the tremendous growth in assisted living (AL) over the past 20 years, it is important to understand how expansion has affected the demand for long-term care (LTC) provided in nursing homes (NHs). We estimated the effect of a change in county-level AL beds on the prevalence of private-pay residents and private-pay resident days at the NH-level.

DATA SOURCES

National census of large AL providers (25+ beds), and Minimum Data Set combined with Medicare enrollment records and claims from 2007 and 2014.

STUDY DESIGN

Retrospective longitudinal analysis of LTC markets.

PRINCIPAL FINDINGS

Mean AL beds per county increased from 285 to 324, while NHs exhibited a decrease in private-pay residents (20.1 to 17.7 percent) and resident days (21.3 to 17.5 percent). An increase of 1,000 AL beds at the county level is associated with a reduction of 0.44 percentage points in private-pay resident days but is not significantly associated with percent of private-pay residents.

CONCLUSIONS

These results suggest that increases in AL capacity have potentially allowed NH residents to delay or decrease their privately financed lengths of stay. As demand for AL continues to grow, it will be important to assess the effects on other LTC sectors.

Increasing Prevalence of Assisted Living as a Substitute for Private-Pay Long-Term Nursing Care

OBJECTIVE

Given the tremendous growth in assisted living (AL) over the past 20 years, it is important to understand how expansion has affected the demand for long-term care (LTC) provided in nursing homes (NHs). We estimated the effect of a change in county-level AL beds on the prevalence of private-pay residents and private-pay resident days at the NH-level.

DATA SOURCES

National census of large AL providers (25+ beds), and Minimum Data Set combined with Medicare enrollment records and claims from 2007 and 2014.

STUDY DESIGN

Retrospective longitudinal analysis of LTC markets.

PRINCIPAL FINDINGS

Mean AL beds per county increased from 285 to 324, while NHs exhibited a decrease in private-pay residents (20.1 to 17.7 percent) and resident days (21.3 to 17.5 percent). An increase of 1,000 AL beds at the county level is associated with a reduction of 0.44 percentage points in private-pay resident days but is not significantly associated with percent of private-pay residents.

CONCLUSIONS

These results suggest that increases in AL capacity have potentially allowed NH residents to delay or decrease their privately financed lengths of stay. As demand for AL continues to grow, it will be important to assess the effects on other LTC sectors.

The Effects of Chains on the Measurement of Competition in the Nursing Home Industry

Consistently accounting for more than 50% of the nursing homes in the United States, corporate chains have played an important role in the industry for several decades. However, few studies have explicitly considered the role of chains in measuring competition in nursing home markets. In this study, we use a newly developed database tracking common ownership over a period of nearly two decades to compare chain-adjusted and unadjusted measures of competition at the county and 25 km fixed-radius levels and explore how the differences would affect the assessment of local market structure. On average, the chain-adjusted Herfindahl–Hirschman Indexes (HHIs) are about 0.02 higher than the unadjusted HHIs. Each year, about 20% to 22% of the counties would appear more concentrated when recalculating HHIs accounting for common ownership. Evidence suggests that nursing home chains tend to focus more on expanding access to new markets within a state than to increasing market power within a smaller local market.

Quality rating and private-prices: Evidence from the nursing home industry

We use the rollout of the five-star rating of nursing homes to study how private-pay prices respond to quality rating. We find that star rating increases the price differential between top- and bottom-ranked facilities. On average, prices of top-ranked facilities increased by 4.8 to 6.0 percent more than the prices of bottom-ranked facilities. We find stronger price effects in markets that are less concentrated where consumers may have more choices of alternative nursing homes. Our results suggest that with simplified design and when markets are less concentrated, consumers are more responsive to quality reporting.

The Structural Burden of Caregiving: Shared Challenges in the United States and Canada

In contrasting health care structures, we each served as caregivers to elderly parents where a shared and unexpected theme in our experiences was the substantial burden of negotiating and managing long-term care (LTC) services within our respective health and social care systems. In this article, we introduce and elucidate an under recognized source of caregiver burden in the United States and Canada: the structural burden of caregiving. We draw on shared and unique experiences cross-nationally, along with the literature, to illustrate that (a) today's caregiving is increasingly characterized by interactions with formal health and social systems in negotiating and managing services, (b) these systems are hampered by discontinuous and fragmented care which increase caregiver stress, and (c) this structural burden likely exacerbates inequity for both care recipients and caregivers. In conclusion, we call for theoretical models of caregiving to highlight health and social systems as creating burden and for measurement of caregiver burden to explicitly consider the time and stress stemming from interactions with formal health and social systems. Finally, we call for future policy evaluation to incorporate structural burden as an additional outcome in considering changes to LTC provisions and funding.

Staffing subsidies and the quality of care in nursing homes

Concerns about the quality of state-financed nursing home care has led to the wide-scale adoption by states of pass-through subsidies, in which Medicaid reimbursement rates are directly tied to staffing expenditure. We examine the effects of Medicaid pass-through on nursing home staffing and quality of care by adapting a two-step FGLS method that addresses clustering and state-level temporal autocorrelation. We find that pass-through subsidies increases staffing by about 1% on average and 2.7% in nursing homes with a low share of Medicaid patients. Furthermore, pass-through subsidies reduce the incidences of pressure ulcer worsening by about 0.9%.

Nursing home prices and market structure: the effect of assisted living industry expansion

Since the 1990s, there has been substantial expansion of facility-based alternatives to nursing home care, such as assisted living facilities. This paper analyzes the relationship between expansion of the assisted living industry, nursing home market structure and nursing home private pay prices using a two-year panel of nursing homes in the State of Ohio. Fixed effect regressions suggest that the expansion of assisted living facilities are associated with increased nursing home concentration, but find no effect on private pay nursing home prices. This would be consistent with assisted livings reducing demand for nursing homes by delaying entry into a nursing home, though assisted livings are not direct competitors of nursing homes.

Assisted living expansion and the market for nursing home care

OBJECTIVE

To analyze the effect of market-level changes in assisted living supply on nursing home utilization and resident acuity.

DATA SOURCES

Primary data on the supply of assisted living over time were collected from 13 states from 1993 through 2007 and merged with nursing home-level data from the Online Survey Certification and Reporting System and market-level information from the Area Resource File.

STUDY DESIGN

Least squares regression specification incorporating market and time-fixed effects.

PRINCIPAL FINDINGS

A 10 percent increase in assisted living capacity led to a 1.4 percent decline in private-pay nursing home occupancy and a 0.2-0.6 percent increase in patient acuity.

CONCLUSIONS

Assisted living serves as a potential substitute for nursing home care for some healthier individuals with greater financial resources, suggesting implications for policy makers, providers, and consumers.

Nursing home price and quality responses to publicly reported quality information

OBJECTIVE

To assess whether the release of Nursing Home Compare (NHC) data affected self-pay per diem prices and quality of care.

DATA SOURCES

Primary data sources are the Annual Survey of Wisconsin Nursing Homes for 2001-2003, Online Survey and Certification Reporting System, NHC, and Area Resource File.

STUDY DESIGN

We estimated fixed effects models with robust standard errors of per diem self-pay charge and quality before and after NHC.

PRINCIPAL FINDINGS

After NHC, low-quality nursing homes raised their prices by a small but significant amount and decreased their use of restraints but did not reduce pressure sores. Mid-level and high-quality nursing homes did not significantly increase self-pay prices after NHC nor consistently change quality.

CONCLUSIONS

Our findings suggest that the release of quality information affected nursing home behavior, especially pricing and quality decisions among low-quality facilities. Policy makers should continue to monitor quality and prices for self-pay residents and scrutinize low-quality homes over time to see whether they are on a pathway to improve quality. In addition, policy makers should not expect public reporting to result in quick fixes to nursing home quality problems.

Does information matter? Competition, quality, and the impact of nursing home report cards

OBJECTIVE

We evaluate the effects of the Nursing Home Quality Initiative (NHQI), which introduced quality measures to the Centers for Medicare and Medicaid Services' Nursing Home Compare website, on facility performance and consumer demand for services.

DATA SOURCES

The nursing home Minimum Data Set facility reports from 1999 to 2005 merged with facility-level data from the On-Line Survey, Certification, and Reporting System.

STUDY DESIGN

We rely on the staggered rollout of the report cards across pilot and nonpilot states to examine the effect of report cards on market share and quality of care. We also exploit differences in nursing home market competition at baseline to identify the impacts of the new information on nursing home quality.

RESULTS

The introduction of the NHQI was generally unrelated to facility quality and consumer demand. However, nursing homes facing greater competition improved their quality more than facilities in less competitive markets.

CONCLUSIONS

The lack of competition in many nursing home markets may help to explain why the NHQI report card effort had a minimal effect on nursing home quality. With the introduction of market-based reforms such as report cards, this result suggests policy makers must also consider market structure in efforts to improve nursing home performance.

Geographic Market Definition: The Case of Medicare-Reimbursed Skilled Nursing Facility Care

Correct geographic market definition is important to study the impact of competition. In the nursing home industry, most studies use geopolitical boundaries to define markets. This paper uses the Minimum Data Set to generate an alternative market definition based on patient flows for Medicare skilled nursing facilities. These distances are regressed against a range of nursing home and area characteristics to determine what influences market size. We compared Herfindahl-Hirschman Indices based on county and resident-flow measures of geographic market definition. Evidence from this comparison suggests that using the county for the market definition is not appropriate across all states.

Predictors of low-care prevalence in Florida nursing homes: the role of Medicaid waiver programs

PURPOSE OF THE STUDY

To examine the relationship between county-level Medicaid home- and community-based service (HCBS) waiver expenditures and the prevalence of low-care residents in Florida nursing homes (NHs).

DESIGN AND METHODS

The present study used a cross-sectional design. We combined two data sources: NH facility-level data (including characteristics of the facility and its residents) and county-level market characteristics (including HCBS waiver expenditures) for 653 Florida NHs in 2007. Low-care was defined as residents who require no physical assistance in any of the 4 late-loss activities of daily living (bed mobility, toileting, transferring, and eating). We estimated a 2-level hierarchical linear model (HLM) to examine the relationship between Medicaid HCBS waiver expenditures and the prevalence of low-care residents while accounting for resident assessment, facility-, and county-level covariates.

RESULTS

All Florida counties offered 2 statewide waivers, and 33 counties offered one or more of the 4 regional Medicaid HCBS waivers in 2007. Per-month beneficiary expenditures ranged from $755 to $1,778. The average Florida NH had 120 beds, and 8.0% of its residents were classified as low-care. Results from the HLM model showed that a $10,000 increase in per-enrollee HCBS waiver expenditures was associated with a 3.5 percentage point reduction in low-care resident prevalence (p = .03).

IMPLICATIONS

The findings suggest that Medicaid HCBS waiver programs may reduce the prevalence of low-care residents in NHs. Future studies should evaluate whether Medicaid HCBS waiver programs are effective in promoting community-living among low-care residents and mitigating the growth in long-term care expenditures.

Do Medicaid wage pass-through payments increase nursing home staffing?

OBJECTIVE

To assess the impact of state Medicaid wage pass-through policy on direct-care staffing levels in U.S. nursing homes.

DATA SOURCES

Online Survey Certification and Reporting (OSCAR) data, and state Medicaid nursing home reimbursement policies over the period 1996-2004.

STUDY DESIGN

A fixed-effects panel model with two-step feasible-generalized least squares estimates is used to examine the effect of pass-through adoption on direct-care staff hours per resident day (HPRD) in nursing homes.

DATA COLLECTION/EXTRACTION METHODS

A panel data file tracking annual OSCAR surveys per facility over the study period is linked with annual information on state Medicaid wage pass-through and related policies.

PRINCIPAL FINDINGS

Among the states introducing wage pass-through over the study period, the policy is associated with between 3.0 and 4.0 percent net increases in certified nurse aide (CNA) HPRD in the years following adoption. No discernable pass-through effect is observed on either registered nurse or licensed practical nurse HPRD.

CONCLUSIONS

State Medicaid wage pass-through programs offer a potentially effective policy tool to boost direct-care CNA staffing in nursing homes, at least in the short term.