The Relationship between Costs and Quality in Veterans Health Administration Community Living Centers: An Analysis...

To examine the relationship between cost and quality in Veterans Health Administration (VA) nursing homes (called Community Living Centers, CLCs) using longitudinal data.

One hundred and thirty CLCs over 13 quarters (from FY2009 to FY2012) were studied. Costs, resident days, and resident severity (RUGs score) were obtained from the VA Managerial Cost Accounting System. Clinical quality measures were obtained from the Minimum Data Set, and resident-centered care (RCC) was measured using the Artifacts of Culture Change Tool.

We used a generalized estimating equation model with facilities included as fixed effects to examine the relationship between total cost and quality after controlling for resident days and severity. The model included linear and squared terms for all independent variables and interactions with resident days.

With the exception of RCC, all other variables had a statistically significant relationship with total costs. For most poorer performing smaller facilities (lower size quartile), improvements in quality were associated with higher costs. For most larger facilities, improvements in quality were associated with lower costs.

The relationship between cost and quality depends on facility size and current level of performance.