Changes in Long-Term Care Markets: Assisted Living Supply and the Prevalence of Low-Care Residents in Nursing Homes

Abstract

ObjectivesTo assess the effect of changes in assisted living (AL) capacity within a market on prevalence of residents with low care needs in nursing homes. DesignRetrospective, longitudinal analysis of nursing home markets. Setting and participantsTwelve thousand two hundred fifity-one nursing homes in operation during 2007 and 2014. MeasurementsWe analyzed the percentage of residents in a nursing home who qualified as low-care. For each nursing home, we constructed a market consisting of AL communities, Medicare beneficiaries, and competing nursing homes within a 15-mile radius. We estimated the effect of change in AL beds on prevalence of low-care residents using multivariate linear models with year and nursing home fixed effects. ResultsThe supply of AL beds increased by an average 258 beds per nursing home market (standard deviation = 591) during the study period. The prevalence of low-care residents decreased from an average of 13.0% (median 10.5%) to 12.2% (median 9.5%). In adjusted models, a 100-bed increase in AL supply was associated with a decrease in low-care residents of 0.041 percentage points (P = .026), controlling for changes in market and nursing home characteristics, county demographics, and year and nursing home fixed effects. In markets with a high percentage of its Medicare beneficiaries (≥14%) dual eligible for Medicaid, the effect of AL is stronger, with a 0.066–percentage point decrease per 100 AL beds (P = .026) vs a 0.016–percentage point decrease in low-duals markets (P = .48). Conclusions and implicationsOur analysis suggests that some of the growth in AL capacity serves as a substitute for nursing homes for patients with low care needs. Furthermore, the effects are concentrated in markets with an above-average proportion of beneficiaries with dual Medicaid eligibility.