Paying for the view? How nursing home prices affect certified staffing ratios

Abstract

Many countries limit public and private reimbursement for nursing care costs for social or financial reasons. Still, quality varies across nursing homes. We explore the causal link between case‐mix adjusted nurse staffing ratios as an indicator of care quality and different price components in Swiss nursing homes. The Swiss reimbursement system limits and subsidizes the care price at the cantonal level, which implicitly limits staffing ratios, while the residents cover the nursing home‐specific lodging price privately. To estimate causal effects, we exploit (i) the exogeneity of the Swiss care price regulation, (ii) nursing‐home fixed effects estimations and (iii) instrumental variables for the lodging price. Our estimates show a positive impact of prices on certified staffing ratios. We find that a 10% increase in care prices increases certified staffing ratios by 3–4%. A comparable 10% increase in lodging prices raises certified staffing ratios by 1.5–10% (depending on the model). Our findings highlight that price limits for nursing care impose a limit on staffing ratios. Furthermore, our results indicate that providers circumvent price limits by increasing lodging prices that are privately covered. Thus, this cost shifting implicitly shifts the financial burden to the residents.

Sociosanitary Legal and Economic Aspects in Nursing Homes for the Elderly in Spain

“…The empirical literature contained little evidence of these variables’ relationship, so our work constituted a novel contribution. Mukamel et al [ 37 ] analyzed US residential centers’ cost functions and reported that homes in states with more stringent regulatory requirements faced higher costs, ceteris paribus. Considering that these regulations were intended to set minimum standards, typically related to quality and safety, Clement et al [ 38 ] and Herr and Hottenrott [ 39 ], both for the US and Germany, found that homes offering excessively low prices were more likely to have an insufficient quality of services.…”