Background: Nursing Home Compare first published clinical quality measures at the end of 2002. It is a quality report card that for the first time offers consumers easily accessible information about the clinical quality of nursing homes. It led to changes in consumers' demand, increasing the relative importance of clinical versus hotel aspects of quality in their search and choice of a nursing home.
Objectives: To examine the hypothesis that nursing homes responding to these changes in demand shifted the balance of resources from hotel to clinical activities.
Subjects: The study included 10,022 free-standing nursing homes nationwide during 2001 to 2006. RESEARCH DESIGN AND DATA: A retrospective multivariate statistical analysis of trends in the ratio of clinical to hotel expenditures, using Medicare cost reports, Minimum Data Set and Online Survey, Certification and Reporting data, controlling for changes in residents' acuity and facility fixed effects. Inference is based on robust standard errors.
Results: The ratio of clinical to hotel expenditures averaged 1.78. It increased significantly (P < 0.001) by 5% following the publication of the report card. The increase was larger and more significant among nursing homes with worse reported quality, lower occupancy, those located in more competitive markets, for-profit ownership and owned by a chain.
Conclusions: The increase in the ratio of clinical to hotel expenditures following publication of the report card suggests that nursing homes responded as expected to the changes in the elasticity of demand with respect to clinical quality brought about by the public reporting of clinical quality measures. The response was stronger among nursing homes facing stronger incentives.