Producing Health: Measuring Value Added of Nursing Homes

Liran Einav; Amy Finkelstein; Neale Mahoney

doi:10.3982/ecta21016

journal article Jan 01, 2025

Producing Health: Measuring Value Added of Nursing Homes

Liran Einav Amy Finkelstein Neale Mahoney

Econometrica Vol. 93 No. 4 pp. 1225-1264 · JSTOR

View at Publisher Save 10.3982/ecta21016

Abstract

We develop a stylized model that allows us to estimate a value‐added measure for nursing homes (“SNFs”) which accounts for patient selection both into and out of a SNF. We use the model, together with detailed data on the physical and mental health of about 6 million Medicare SNF patients between 2011 and 2016, to estimate the value added for about 14,000 distinct SNFs. We document substantial heterogeneity in value added. Nationwide, compared to a 10th percentile SNF, a 90th percentile SNF is able to discharge a patient at the same health level almost a week sooner, or one quarter of the median length of stay. Heterogeneity in value added within a market is almost as large as it is nationwide. Our results point to the potential for substantial gains through policies that encourage reallocation of patients to higher‐quality SNFs within their market.

Topics

No keywords indexed for this article. Browse by subject →

References

79

[1]

12 U.S.C. §1715w (2014).

[2]

42 C.F.R. §483 (2016).

[3]

Abdulkadiroglu American Economic Review (2020) 10.1257/aer.20172040

[4]

Agarwal, Nikhil, and Paulo Somaini (2022): “Demand Analysis Under Latent Choice Constraints,” NBER Working Paper, number 29993. 10.3386/w29993

[5]

Selection on Observed and Unobserved Variables: Assessing the Effectiveness of Catholic Schools

Joseph G. Altonji, Todd E. Elder, Christopher R. Taber

Journal of Political Economy 2005 10.1086/426036

[6]

Boccuti, Cristina, Giselle Casillas, and Tricia Neuman (2015): “Reading the Stars: Nursing Home Quality Star Ratings, Nationally and by State.”

[7]

Bring Quality & Quantity (1995) 10.1007/bf01101897

[8]

Card American Economic Journal: Economic Policy (2023)

[9]

Carpenter BMC Geriatrics (2006)

[10]

Castle The Gerontologist (2010) 10.1093/geront/gnq052

[11]

Centers for Medicare & Medicaid Services (2008a): “Talking Points—Improving the CMS Nursing Home Compare Website | Guidance Portal.”

[12]

Centers for Medicare & Medicaid Services (2008b): “The Five-Star Nursing Home Rating System—Questions and Answers.”

[13]

Centers for Medicare & Medicaid Services (2016): “Long-Term Care Facility Resident Assessment Instrument 3.0 User's Manual.”

[14]

Centers for Medicare & Medicaid Services (2017): “Medicare-Required SNF PPS Assessments.”

[15]

(2018)

[16]

Centers for Medicare & Medicaid Services (2019a): “Medicare Coverage of Skilled Nursing Facility Care.”

[17]

Centers for Medicare & Medicaid Services (2019b): “National Health Expenditures by Type of Service and Source of Funds: Calendar Years 1960 to 2019.”

[18]

Centers for Medicare & Medicaid Services (2022): “Special Focus Facility (“SFF”) Program.”

[19]

Centers for Medicare & Medicaid Services (2024a): “Compare Nursing Home Quality.”

[20]

Centers for Medicare & Medicaid Services (2024b): “Long Term Care Minimum Data Set (MDS) 3.0.”

[21]

Centers for Medicare & Medicaid Services (2024c): “Master Beneficiary Summary File.”

[22]

Centers for Medicare & Medicaid Services (2024d): “Medicare Provider Analysis and Review.”

[23]

Health Care Exceptionalism? Performance and Allocation in the US Health Care Sector

Amitabh Chandra, Amy Finkelstein, Adam Sacarny et al.

American Economic Review 2016 10.1257/aer.20151080

[24]

Chetty American Economic Review (2014) 10.1257/aer.104.9.2593

[25]

Measuring the Impacts of Teachers II: Teacher Value-Added and Student Outcomes in Adulthood

Raj Chetty, John N. Friedman, Jonah E. Rockoff

American Economic Review 2014 10.1257/aer.104.9.2633

[26]

(2008)

[27]

Cornell Journal of Health Economics (2019) 10.1016/j.jhealeco.2019.05.008

[28]

Cutler Journal of Health Economics (2007) 10.1016/j.jhealeco.2007.09.003

[29]

Dartmouth Atlas (2024): “Geographic Boundary Files.”

[30]

Doyle The Review of Economics and Statistics (2019) 10.1162/rest_a_00804

[31]

Dubin Econometrica (1984) 10.2307/1911493

[32]

Producing Health: Measuring Value Added of Nursing Homes

Liran Einav, Amy Finkelstein, Neale Mahoney

Econometrica 10.3982/ecta21016

[33]

Einav American Economic Journal: Economic Policy (2016)

[34]

Gandhi, Ashvin (2020): “Picking Your Patients: Selective Admissions in the Nursing Home Industry,” Working Paper, visited on January 8, 2021.

[35]

Gandhi Health Affairs (2021) 10.1377/hlthaff.2020.00957

[36]

Gawande, Atul (2009): “The Cost Conundrum: What a Texas Town Can Teach us About Health Care,” The New Yorker.

[37]

Geweke Econometrica (2003) 10.1111/1468-0262.00444

[38]

Goldstein, Matthew, and Robert Gebeloff (2019): “Dozens of Nursing Homes With HUD-Backed Mortgages Have ‘Serious Deficiencies’,” The New York Times.

[39]

Grabowski Journal of Health Economics (2013) 10.1016/j.jhealeco.2012.08.007

[40]

Grabowski The Review of Economics and Statistics (2008) 10.1162/rest.90.4.754

[41]

On the Concept of Health Capital and the Demand for Health

Michael Grossman

Journal of Political Economy 1972 10.1086/259880

[42]

Gupta The Review of Financial Studies (2023) 10.1093/rfs/hhad082

[43]

Hackmann American Economic Review (2019) 10.1257/aer.20151057

[44]

Hackmann American Economic Journal: Applied Economics (2024)

[45]

Harrington, Charlene, Helen Carrillo, Rachel Garfield, MaryBeth Musumeci, and Ellen Squires (2018): “Nursing Facilities, Staffing, Residents and Facility Deficiencies, 2009 Through 2016.”

[46]

Sample Selection Bias as a Specification Error

James J. Heckman

Econometrica 1979 10.2307/1912352

[47]

Hoffman The Reading Teacher (2001)

[48]

Hull, Peter (2018): “Estimating Hospital Quality With Quasi-Experimental Data,” 3118358, Rochester, NY, February 5, 2018. Visited on November 2, 2024.

[49]

(2013)

[50]

Rotten Apples: An Investigation of the Prevalence and Predictors of Teacher Cheating

B. A. Jacob, S. D. Levitt

The Quarterly Journal of Economics 2003 10.1162/00335530360698441

Showing 50 of 79 references

Cited By

6

Producing Health: Measuring Value Added of Nursing Homes

Liran Einav, Amy Finkelstein · 2025

Econometrica

Metrics

6

Citations

79

References

Details

Published: Jan 01, 2025
Vol/Issue: 93(4)
Pages: 1225-1264

Authors

L

Liran Einav

Department of Economics, Stanford University; NBER

A

Amy Finkelstein

Department of Economics, MIT; NBER

N

Neale Mahoney

Department of Economics, Stanford University; NBER

Funding

National Institute on Aging

Cite This Article

Liran Einav, Amy Finkelstein, Neale Mahoney (2025). Producing Health: Measuring Value Added of Nursing Homes. Econometrica, 93(4), 1225-1264. https://doi.org/10.3982/ecta21016

Producing Health: Measuring Value Added of Nursing Homes

You May Also Like