Performing Well on Nursing Home Report Cards: Does It Pay Off?

Abstract

To examine whether high performance or improvement on quality measures leads to economic rewards for nursing homes in the presence of public reporting. Data from 6,286 freestanding Medicare-certified nursing homes between 1999 and 2005 were identified in Medicare Cost Reports, Minimum Data Set, and Online Survey and Certification Reporting System. Using a facility-level fixed-effects model, the effect of public reporting on financial performance was measured by comparing each of four financial outcomes (revenues, expenses, operating, and total profit margins) before (1999-2002) to after (2003-2005) public reporting was initiated. The effects were estimated separately by level of performance and improvement over time. Facilities that improved on publicly reported performance had increased revenues and higher profit margins after public reporting, mainly through increased Medicare admissions. High-scoring facilities showed similar patterns, though differences were not statistically significant. Providers that improve their performance under public reporting may receive a return on their investment in quality improvement. This supports the business case for public reporting.