Nursing home prices and market structure: the effect of assisted living industry expansion

Rates of health services use among residents of retirement homes in Ontario: a population-based cohort study

BACKGROUND

Because there are no standardized reporting systems specific to residents of retirement homes in North America, little is known about the health of this distinct population of older adults. We evaluated rates of health services use by residents of retirement homes relative to those of residents of long-term care homes and other populations of older adults.

METHODS

We conducted a retrospective cohort study using population health administrative data from 2018 on adults 65 years or older in Ontario. We matched the postal codes of individuals to those of licensed retirement homes to identify residents of retirement homes. Outcomes included rates of hospital-based care and physician visits.

RESULTS

We identified 54 733 residents of 757 retirement homes (mean age 86.7 years, 69.0% female) and 2 354 385 residents of other settings. Compared to residents of long-term care homes, residents of retirement homes had significantly higher rates per 1000 person months of emergency department visits (10.62 v. 4.48, adjusted relative rate [RR] 2.61, 95% confidence interval [CI] 2.55 to 2.67), hospital admissions (5.42 v. 2.08, adjusted RR 2.77, 95% CI 2.71 to 2.82), alternate level of care (ALC) days (6.01 v. 2.96, adjusted RR 1.51, 95% CI 1.48 to 1.54), and specialist physician visits (6.27 v. 3.21, adjusted RR 1.64, 95% CI 1.61 to 1.68), but a significantly lower rate of primary care visits (16.71 v. 108.47, adjusted RR 0.13, 95% CI 0.13 to 0.14).

INTERPRETATION

Residents of retirement homes are a distinct population with higher rates of hospital-based care. Our findings can help to inform policy debates about the need for more coordinated primary and supportive health care in privately operated congregate care homes.

Nursing Home Competition, Prices and Quality: A Scoping Review and Policy Lessons

BACKGROUND AND OBJECTIVES

In recent years, countries have increasingly relied on markets to improve efficiency, contain costs, and maintain quality in aged care. Under the right conditions, competition can spur providers to compete by offering better prices and higher quality of services. However, in aged care, market failures can be extensive. Information about prices and quality may not be readily available and search costs can be high. This study undertakes a scoping review on competition in the nursing home sector, with an emphasis on empirical evidence in relation to how competition affects prices and quality of care.

RESEARCH DESIGN AND METHODS

Online databases were used to identify studies published in English language between 1988 and 2020. A total of 50 studies covering nine countries are reviewed.

RESULTS

The review finds conflicting evidence on the relationship between competition and quality. Some studies find greater competition leading to higher quality, others find the opposite. Institutional features such as the presence of binding supply restrictions on nursing homes and public reporting of quality information are important considerations. Most studies find greater competition tends to result in lower prices, although the effect is small.

DISCUSSION AND IMPLICATIONS

The literature offers several key policy lessons, including the relationship between supply restrictions and quality which has implications on whether increasing subsidies can result in higher quality and the importance of price transparency and public reporting of quality.

Shared Decision Making About Housing Transitions for Persons With Dementia: A Four-Case Care Network Perspective

BACKGROUND

Persons with dementia (PWDs) and their caregivers often face difficult housing decisions, that is, decisions about their living arrangements, in which the perspectives of all members of the care network should be involved.

OBJECTIVE

We performed a qualitative data analysis to assess the extent to which housing decisions for PWDs with their formal and informal caregivers correspond to an interprofessional shared decision making (IP-SDM) approach, and what light this approach sheds on their experiences with decision making.

RESEARCH DESIGN AND METHODS

We used the IP-SDM model to content-code and analyze data from 4 care networks, each consisting of a PWD, 2 informal and 2 formal caregivers.

RESULTS

Decision making in all networks corresponded to most IP-SDM elements, but never included all network members. Decision making was guided by the wishes of the PWD, but their actual involvement decreased over time.

DISCUSSION

Results show that while the IP-SDM model was helpful, the options change with cognitive decline and moving to a nursing home can become inevitable in spite of preferences.

IMPLICATIONS

Timely and honest communication helps to mitigate the distress of deciding against patient preferences, as could advance care planning about future housing transitions.

Secret Shopper Data on Private Prices in the Nursing Home Industry From 2008 to 2010

Nationwide nursing home private-pay prices at the facility-level have not been available for researchers interested in studying this unique health care market. This study presents a new data source, Caregiverlist, for private-pay prices for private and semiprivate rooms for 12,000 nursing homes nationwide collected between 2008 and 2010. We link these data to publicly available national nursing home-level data sets to examine the relationship between price and nursing home characteristics. We also compare private-pay prices with average private-pay revenues per day for California nursing homes obtained from facilities' financial filings. On average, private-pay prices were $224 per day for private rooms compared with $197 per day for semiprivate rooms. We find that nursing homes that are nonprofit, urban, hospital-based, have a special care unit, chain-owned, and have higher quality ratings have higher prices. We find average revenues per day in California to be moderately correlated with prices reported by Caregiverlist.

The Determinants and Variation of Nursing Home Private-Pay Prices: Organizational and Market Structure

Nursing home (NH) care is arguably the most significant financial risk faced by the elderly without long-term care insurance or Medicaid coverage. Annual out-of-pocket expenditures for NH care can easily exceed $70,000. However, our understanding of private-pay prices is limited by data availability. Utilizing a unique data set on NH prices from 2005 through 2010 across eight states, we find that NH price growth has consistently outpaced growth in consumer and medical care prices. After adjusting for geographical and facility differences, for-profit chains charge the lowest prices, independently operated for-profit and nonprofit NHs have similar prices, and nonprofit chains charge the highest prices. Adjusted prices are also likely to be higher when NHs have higher occupancy rates and markets are more concentrated. The significant differences in price across organizational and market structures suggest private-pay prices can be an important factor when evaluating and comparing the value of NH care.

Increasing Prevalence of Assisted Living as a Substitute for Private-Pay Long-Term Nursing Care

OBJECTIVE

Given the tremendous growth in assisted living (AL) over the past 20 years, it is important to understand how expansion has affected the demand for long-term care (LTC) provided in nursing homes (NHs). We estimated the effect of a change in county-level AL beds on the prevalence of private-pay residents and private-pay resident days at the NH-level.

DATA SOURCES

National census of large AL providers (25+ beds), and Minimum Data Set combined with Medicare enrollment records and claims from 2007 and 2014.

STUDY DESIGN

Retrospective longitudinal analysis of LTC markets.

PRINCIPAL FINDINGS

Mean AL beds per county increased from 285 to 324, while NHs exhibited a decrease in private-pay residents (20.1 to 17.7 percent) and resident days (21.3 to 17.5 percent). An increase of 1,000 AL beds at the county level is associated with a reduction of 0.44 percentage points in private-pay resident days but is not significantly associated with percent of private-pay residents.

CONCLUSIONS

These results suggest that increases in AL capacity have potentially allowed NH residents to delay or decrease their privately financed lengths of stay. As demand for AL continues to grow, it will be important to assess the effects on other LTC sectors.

Increasing Prevalence of Assisted Living as a Substitute for Private-Pay Long-Term Nursing Care

OBJECTIVE

Given the tremendous growth in assisted living (AL) over the past 20 years, it is important to understand how expansion has affected the demand for long-term care (LTC) provided in nursing homes (NHs). We estimated the effect of a change in county-level AL beds on the prevalence of private-pay residents and private-pay resident days at the NH-level.

DATA SOURCES

National census of large AL providers (25+ beds), and Minimum Data Set combined with Medicare enrollment records and claims from 2007 and 2014.

STUDY DESIGN

Retrospective longitudinal analysis of LTC markets.

PRINCIPAL FINDINGS

Mean AL beds per county increased from 285 to 324, while NHs exhibited a decrease in private-pay residents (20.1 to 17.7 percent) and resident days (21.3 to 17.5 percent). An increase of 1,000 AL beds at the county level is associated with a reduction of 0.44 percentage points in private-pay resident days but is not significantly associated with percent of private-pay residents.

CONCLUSIONS

These results suggest that increases in AL capacity have potentially allowed NH residents to delay or decrease their privately financed lengths of stay. As demand for AL continues to grow, it will be important to assess the effects on other LTC sectors.

The Role of Assisted Living Capacity on Nursing Home Financial Performance

The rapid growth of the assisted living industry has coincided with decreased levels of nursing home occupancy and financial performance. The purpose of this article is to examine the relationships among assisted living capacity, nursing home occupancy, and nursing home financial performance. In addition, we explore whether the relationship between assisted living capacity and nursing home financial performance is mediated by nursing home occupancy. This research utilized publicly available secondary data, for the state of Florida from 2003 through 2015. General descriptive statistics were used to assess the relationships among financial performance, assisted living capacity, and occupancy. To explore the relationships among financial performance, assisted living capacity and occupancy, and test potential mediation of occupancy, we followed Baron and Kenny's approach and estimated 3 models examining the relationships between (1) assisted living capacity and nursing home financial performance, (2) assisted living capacity and nursing home occupancy, and (3) nursing home occupancy and financial performance after assisted living capacity is included in the model. We used generalized estimating equations, to adjust for repeated measures and to model the above relationships. Year fixed effects control for time trend. The independent variable, assisted living beds, was lagged for 1 year to account for the potential influence on financial performance. The final analytic sample consisted of 7688 nursing home-year observations from 657 unique nursing homes. Our findings suggest that assisted living capacity does have a negative impact on nursing homes' financial performance. Even though, assisted living capacity seems not to significantly decrease nursing home occupancy. The relationship between assisted living capacity and financial performance was not mediated through occupancy. These findings suggest that assisted living communities may not be able to significantly reduce nursing home occupancy; however, the presence of assisted living communities may create additional financial/competitive pressures that result in decreased nursing home financial performance.

The Effects of Chains on the Measurement of Competition in the Nursing Home Industry

Consistently accounting for more than 50% of the nursing homes in the United States, corporate chains have played an important role in the industry for several decades. However, few studies have explicitly considered the role of chains in measuring competition in nursing home markets. In this study, we use a newly developed database tracking common ownership over a period of nearly two decades to compare chain-adjusted and unadjusted measures of competition at the county and 25 km fixed-radius levels and explore how the differences would affect the assessment of local market structure. On average, the chain-adjusted Herfindahl–Hirschman Indexes (HHIs) are about 0.02 higher than the unadjusted HHIs. Each year, about 20% to 22% of the counties would appear more concentrated when recalculating HHIs accounting for common ownership. Evidence suggests that nursing home chains tend to focus more on expanding access to new markets within a state than to increasing market power within a smaller local market.

Quality rating and private-prices: Evidence from the nursing home industry

We use the rollout of the five-star rating of nursing homes to study how private-pay prices respond to quality rating. We find that star rating increases the price differential between top- and bottom-ranked facilities. On average, prices of top-ranked facilities increased by 4.8 to 6.0 percent more than the prices of bottom-ranked facilities. We find stronger price effects in markets that are less concentrated where consumers may have more choices of alternative nursing homes. Our results suggest that with simplified design and when markets are less concentrated, consumers are more responsive to quality reporting.