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American Journal of Medical Quality
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The Relationship Between Quality of Care and Costs in Nursing Homes

Robert Weech-Maldonado, PhD

Department of Health Services Research, Management, and Policy, University of Florida, PO Box 100195, Gainesville, FL 32610-0195 rweech{at}phhp.ufl.edu

Dennis Shea, PhD

Department of Health Policy and Administration, Pennsylvania State University, University Park

Vincent Mor, PhD

Department of Community Health and a faculty associate in the Center for Gerontology and Health Care Research, Brown University, Providence, Rhode Island

The purpose of this study was to evaluate the impact of quality of care on costs in nursing homes. The sample consisted of 749 nursing homes in 5 states in 1996. Nursing home cost functionswere estimated using weighted 2-stage least-squares regression analysis. Costs are measured as the facility's total patient care costs. Two outcome measures are used as quality indicators: pressure ulcers worsening and mood decline. Nonmonotonic relationships are observed between quality and costs for nursing homes in the sample. However, the pattern of the relationship is different depending onthe quality indicator. For pressure ulcers, the authors observe an inverted U-shaped curvewith increasing costs at the lower range of quality but decreasing costs associated with higher quality after a threshold. The opposite pattern is observed for mood decline, with a relatively flat curve at the lower range of quality but increasing costs after a threshold.

Key Words: costs • quality • outcomes • nursing homes • long-term care

American Journal of Medical Quality, Vol. 21, No. 1, 40-48 (2006)
DOI: 10.1177/1062860605280643
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