Is higher nursing home quality more costly?

Di Giorgio, Laura; Filippini, Massimo; Masiero, Giuliano

doi:10.1007/s10198-015-0743-4

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Filippini_Masiero_2016_Springer_EJHE_s10198-015-0743-4

Journal article

Is higher nursing home quality more costly?

Di Giorgio, Laura Istituto di economia politica (IdEP), Facoltà di scienze economiche, Università della Svizzera italiana, Svizzera - Institute for Health Metrics and Evaluation (IHME), University of Washington, United States
Filippini, Massimo ORCID Istituto di economia politica (IdEP), Facoltà di scienze economiche, Università della Svizzera italiana, Svizzera - Department of Management, Technology and Economics, ETH, Zurich, Switzerland
Masiero, Giuliano ORCID Istituto di economia politica (IdEP), Facoltà di scienze economiche, Università della Svizzera italiana, Svizzera - Department of Management, Information and Production Engineering (DIGIP), University of Bergamo, Italy

2016

Published in:

European Journal of Health Economics. - 2016, vol. 17, no. 8, p. 1011-1026

English Widespread issues regarding quality in nursing homes call for an improved understanding of the relationship with costs. This relationship may differ in European countries, where care is mainly delivered by nonprofit providers. In accordance with the economic theory of production, we estimate a total cost function for nursing home services using data from 45 nursing homes in Switzerland between 2006 and 2010. Quality is measured by means of clinical indicators regarding process and outcome derived from the Minimum Data Set. We consider both composite and single quality indicators. Contrary to most previous studies, we use panel data and control for omitted variables bias. This allows us to capture features specific to nursing homes that may explain differences in structural quality or cost levels. Additional analysis is provided to address simultaneity bias using an instrumental variable approach. We find evidence that poor levels of quality regarding outcome, as measured by the prevalence of severe pain and weight loss, lead to higher costs. This may have important implications for the design of payment schemes for nursing homes.

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