The impact of ownership type on the cost and quality of nursing home care in the United States

Abstract

The overall objective of this research was to analyze the effect of ownership status on 1) quality of care delivered, 2) the cost of nursing homes in the United States and 3) wages to Registered Nurses. The model developed here uses a two stage least squares technique to correct for observed endogeneity problems. Results show that a model which includes ownership classification interactively with all independent variables, performs better than a model which simply uses dummies to proxy for ownership status. Nonprofit homes were found to have higher direct patient care expenditures than profit homes. Non-profits were also found to have a more specialized nursing force. Both of these results suggest that non-profits may actually provide a higher quality of care than for profit enterprises. No support was found for the hypothesis that nonprofits have more philanthropic wage policies.