Do Elderly Choose Nursing Homes by Quality, Price or Location?

32 Pages Posted: 6 Feb 2015

See all articles by Hendrik Schmitz

Hendrik Schmitz

University of Duisburg-Essen - Department of Economics and Business Administration

Magdalena A. Stroka

Rhine-Westphalia Institute for Economic Research (RWI-Essen); Ruhr University of Bochum - Faculty of Economics; WINEG Scientific Institute of TK for Benefit and Efficiency in Health Care

Date Written: July 30, 2014

Abstract

Quality report cards addressing information asymmetry in the health care market have become a popular strategy used by policymakers to improve the quality of care for elderly. Using individual level data from the largest German sickness fund merged with institutional level data, we examine the relationship between nursing home quality, as measured by recently introduced report cards, nursing home prices, nursing home’s location and the individual choice of nursing homes. Report cards were stepwise introduced as of 2009 and we use a sample of 2010 that includes both homes that had been evaluated at that time and that had not yet been. Thus, we can distinguish between institutions with good and bad ratings as well as non-rated nursing homes. We find that the probability of choosing a nursing home decreases in distance and price. However, we find no significant effect of reported quality on individuals’ choice of nursing homes.

Keywords: Nursing home choice; quality report cards; quality information; demand

JEL Classification: I10

Suggested Citation

Schmitz, Hendrik and Stroka, Magdalena A., Do Elderly Choose Nursing Homes by Quality, Price or Location? (July 30, 2014). Ruhr Economic Paper No. 495, Available at SSRN: https://ssrn.com/abstract=2473952 or http://dx.doi.org/10.2139/ssrn.2473952

Hendrik Schmitz

University of Duisburg-Essen - Department of Economics and Business Administration ( email )

Universitätsstr. 9
Essen, 45141
Germany

Magdalena A. Stroka (Contact Author)

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

Ruhr University of Bochum - Faculty of Economics ( email )

Ruhr University of Bochum
Faculty of Economics
D-44780 Bochum, DE 44780
Germany

WINEG Scientific Institute of TK for Benefit and Efficiency in Health Care ( email )

Bramfelder Str. 140
Hamburg
Germany

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