Effect of nursing home ownership on the quality of post-acute care: an instrumental variables approach

J Health Econ. 2013 Jan;32(1):12-21. doi: 10.1016/j.jhealeco.2012.08.007. Epub 2012 Sep 14.


Given the preferential tax treatment afforded nonprofit firms, policymakers and researchers have been interested in whether the nonprofit sector provides higher nursing home quality relative to its for-profit counterpart. However, differential selection into for-profits and nonprofits can lead to biased estimates of the effect of ownership form. By using "differential distance" to the nearest nonprofit nursing home relative to the nearest for-profit nursing home, we mimic randomization of residents into more or less "exposure" to nonprofit homes when estimating the effects of ownership on quality of care. Using national Minimum Data Set assessments linked with Medicare claims, we use a national cohort of post-acute patients who were newly admitted to nursing homes within an 18-month period spanning January 1, 2004 and June 30, 2005. After instrumenting for ownership status, we found that post-acute patients in nonprofit facilities had fewer 30-day hospitalizations and greater improvement in mobility, pain, and functioning.

Publication types

  • Research Support, N.I.H., Extramural

MeSH terms

  • Acute Disease / rehabilitation
  • Acute Disease / therapy
  • Aged, 80 and over
  • Female
  • Health Facilities, Proprietary / economics
  • Health Facilities, Proprietary / standards
  • Health Facilities, Proprietary / statistics & numerical data
  • Humans
  • Male
  • Medicare / economics
  • Medicare / statistics & numerical data
  • Nursing Homes / economics
  • Nursing Homes / organization & administration
  • Nursing Homes / standards*
  • Organizations, Nonprofit / economics
  • Organizations, Nonprofit / standards
  • Organizations, Nonprofit / statistics & numerical data
  • Ownership / economics
  • Ownership / statistics & numerical data
  • Quality Indicators, Health Care / economics
  • Quality Indicators, Health Care / statistics & numerical data
  • Quality of Health Care / economics*
  • Quality of Health Care / statistics & numerical data
  • United States