Ownership, Costs, and Facility Characteristics in the National Long-Term Health Care Industry

Abstract

The rapid rise in long-term health care costs has become a matter of national concern. Recognizing the national trend toward fiscal responsibility, policy makers have become interested in methods of controlling costs without sacrifices in care. One area of interest is the effect of facility ownership on facility perform ance. For-profit facilities have generally been found to provide care at lower costs than non-profit facilities. Given such results, it is important to find whether there are any significant ownership-related differences in facility characteristics associated with these cost differences. This study examines data from the 1977 National Nursing Home Survey. It is found that for-profit skilled nursing facilities are lower cost than non-profit or government facilities. Further it is found that organizational form affects facility costs. Facility size, location, resident mix, and aspects of facility quality are found to be meaningfully associated with facility ownership-related and organization-related cost differences.