Abstract
This quantitative study investigates the effect of certificate-of-need (CON) regulation on the quality of care in the nursing home industry. It uses county-level demographic data from the 48 contiguous US states that are extracted from the American Community Survey (ACS) and cover the years 2012, 2013, and 2014. In doing so, it employs a new set of service quality variables captured from a variety of county-level data sources. Instrumental variables results indicate that health survey scores for nursing homes that are computed by healthcare professionals are about 18–24% lower, depending on the type of nursing home under consideration, in states with CON regulation. We also find that the presence of CON regulation leads to a substitution of lower-quality certified nursing assistant care for higher-quality licensed practical nurse care, regardless of the type of nursing home under consideration.
Highlights
In the past 25 years, the increasing cost of nursing home care has been a major concern for municipalities and state legislatures in the US
The typical for-profit nursing home in CON states substitutes about 6 min of work per resident by a certified nursing assistant (CNA) for about 2 min of work per resident by an licensed practical nurses (LPNs)
Given that the typical nursing home has 90 residents, this means that nursing homes located in CON states reduce time worked by LPNs by 3 h
Summary
In the past 25 years, the increasing cost of nursing home care has been a major concern for municipalities and state legislatures in the US. Between 1994 and 2009, average spending on post-acute care more than doubled for most diagnoses [1] Despite these increases, the nursing home industry continues to be considered as alternative housing for seniors and a long-term care option for older Americans [2]. This study investigates the relationship between CON regulation and the quality of service in the nursing home industry. This study hypothesizes that the various entry barriers associated with CON regulation reduce competition among nursing homes, which in turn puts downward pressure on the quality of service provided. Before turning to our results, we first provide a brief review of prior literature concerning economic regulation of the nursing home industry
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