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Prospecting Microbial Strains for Bioremediation and Probiotics Development for Metaorganism Research and Preservation

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Published on: October 31, 2019

Does prospective payment really contain nursing home costs?

Li-Wu Chen¹, Dennis G Shea

¹Department of Preventive and Societal Medicine, University of Nebraska Medical Center, Omaha 68198, USA.

Health Services Research

|May 31, 2002

Summary

Prospective payment systems did not reduce nursing home costs without affecting care quality. Facilities may cut quality rather than control expenses when payments aren't quality-adjusted, impacting patient outcomes.

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Area of Science:

Health Services Research
Healthcare Economics
Gerontology

Background:

Prospective payment systems (PPS) aim to improve efficiency in healthcare settings.
The impact of PPS on nursing home efficiency and quality of care remains debated.
Previous studies often failed to adequately control for quality variations and endogeneity.

Purpose of the Study:

To investigate if nursing homes achieve greater efficiency under PPS without compromising care quality.
To analyze the relationship between payment models and nursing home cost-efficiency.

Main Methods:

Utilized four national datasets from 1994, including a sample of 4,635 nursing homes.
Employed a modified hybrid functional form to estimate nursing home costs.
Controlled for quality differences and addressed output/quality endogeneity using instrumental variables and factor analysis.

Main Results:

Nursing homes under PPS did not demonstrate lower costs compared to those under retrospective payment systems.
These findings held true even after controlling for quality variations and endogeneity issues.

Conclusions:

PPS may lead to cost reductions through decreased quality of care, not genuine cost efficiency.
Without quality adjustments in PPS, nursing homes might reduce care quality to manage costs.
Future research should focus on quality-adjusted payment designs for nursing home care.