Nursing Homes response to publication of the Nursing Home Compare report card: The “Teaching to the test” strategy

The publication of the nursing home report card has allowed consumers to assess clinical quality, placing it on par with hotel quality. As a result, nursing homes faced changes in the demand for their services leading to incentives to reallocate resources from hotel to clinical activities.

To test this hypothesis we analyzed Medicare cost reports, MDS and OSCAR data for 10,022 nursing homes nationwide in 2001-2006. Following a methodology developed in previous studies, we aggregated cost centers data into expenditures associated with hotel and clinical activities. We estimated regression models with robust standard errors with the ratio of these expenditures by year as the dependent variable and a pre/post publication period variable, facility case mix index, proportion of Medicare patients, and fixed facility effects as the independent variables. The ratio of clinical to hotel expenditures averaged 0.615. It increased by 14% (p<0.001) following the publication of the report card. The increase was larger and more significant among nursing homes with worse reported quality, lower occupancy, located in more competitive markets, for-profit ownership and owned by a chain. The shift in resources was accomplished through infusion of new funding: Inflation adjusted hotel expenditures per day have remained constant during the period, while case mix inflation adjusted clinical expenditures have increased.

This study suggests that nursing homes have responded to the demand incentives created by the report cards. However, due to infusion of new monies, the improvement in clinical quality was not achieved at the expense of hotel quality.