The Impact of Nursing Staff Wages on Nursing Home Quality: An Instrumental Variable Approach

Nursing staff are central to ensuing high-quality care in nursing homes (NHs), yet their wages often lag behind those in other health care settings. This study aimed to examine whether higher wages for nursing staff-registered nurses (RNs), licensed practical nurses (LPNs), and certified nursing assistants (CNAs)-were associated with better NH quality.

This was an observational study using panel data from 2020 to 2022.

The study included all Centers for Medicare and Medicaid Services-certified US NHs. The analytic data file comprised 37,577 facilities.

This study used multiple secondary datasets, including the Payroll-Based Journal, Medicare Cost Reports, Care Compare: Five-Star Quality Rating System (Five-Star QRS), and LTCFocus.org. The primary outcome was NH quality, operationalized through the quality domain of the Five-Star QRS. The primary independent variables were the facility-level average hourly wages for RNs, LPNs, and CNAs, adjusted for inflation. To address potential endogeneity, average nursing staff wages at the county level, excluding the index facility, were used as an instrument for wages.

A 1-dollar increase in wages for RNs, LPNs, and CNAs was associated with 12% (95% CI, 1.07-1.17), 10% (95% CI, 1.05-1.15), and 8% (95% CI, 1.07-1.45) higher odds, respectively, of obtaining a higher star rating (P < .001). Marginal effects analysis showed that a 1-dollar increase in wages was associated with a 2.4%, 2.0%, and 1.8% higher likelihood of achieving a 5-star rating for RNs, LPNs, and CNAs, respectively.

Higher nursing staff wages were associated with increased odds of achieving a higher quality rating. NHs need to offer competitive wages as part of broader efforts to improve quality. Targeted reimbursement strategies may be necessary to support wage increases, especially for facilities serving a high proportion of vulnerable residents.