High performance on quality measures linked to financial benefits for nursing homes

Research Activities, August 2011, No. 372

Nursing homes benefit financially from investments made in improving performance, suggests a new study. The researchers examined data on 6,286 Medicare-certified nursing homes between 1999 and 2005. They compared revenues, expenses, operating margins, and total profit margins before and after public reporting of quality data was initiated with the Nursing Home Compare (NHC) Web site in 2002. Nursing homes that improved on publicly reported performance had increased revenues and higher profit margins after public reporting, mainly through increased Medicare admissions.

The potential return on investment may motivate providers to invest in improving care quality. On the other hand, low-quality providers that face the most severe resource constraints—those who predominantly care for poor and under-served populations—may be less likely to undertake quality improvement, because incremental quality improvements do not have much financial payback. If quality improvement is concentrated in highly resourced facilities, the quality gap between facilities may widen, caution the researchers. Safeguards may be necessary to ensure that low-quality facilities have the necessary resources to improve.

To compare quality of care at nursing homes, the study focused on 15 clinical quality measures included in the NHC, a Web site used by the Centers for Medicare & Medicaid Services to publicly report the quality of care at nursing homes. The NHC quality measures draw on the Minimum Data Set, which contains resident-level clinical data collected at regular intervals for every resident in all Medicare- or Medicaid-certified nursing homes. Nursing home financial performance was measured using Medicare Cost Reports that contain facility-level information. This study was supported by the Agency for Healthcare Research and Quality (HS16478).

See "Performing well on nursing home report cards: Does it pay off?" by Jeongyoung Park, Ph.D., R. Tamara Konetzka, Ph.D., and Rachel M. Werner, M.D., Ph.D., in the April 2011 HSR: Health Services Research 46(2), pp. 531-554.

Current as of August 2011
Internet Citation: High performance on quality measures linked to financial benefits for nursing homes: Research Activities, August 2011, No. 372. August 2011. Agency for Healthcare Research and Quality, Rockville, MD. http://www.ahrq.gov/news/newsletters/research-activities/aug11/0811RA7.html