Estimating Nursing Home Quality with Selection

Abstract

We estimate a Bayesian model of nursing home quality using variational inference. We then conduct three exercises. First, we examine the correlates of quality, finding that public report cards have near-zero correlation. Second, we show that higher quality nursing homes fared better during the pandemic: a one standard deviation increase in quality corresponds to 2.4% fewer Covid-19 cases. Finally, we show that a 10% increase in the Medicaid reimbursement rate raises quality, leading to a 1.85 percentage point increase in 90-day survival. Such a reform would be highly cost-effective even under conservative estimates of the quality-adjusted statistical value of life.

Note:
Funding Information: Olenski gratefully acknowledges support from the National Science Foundation Graduate Research Fellowship.

Declaration of Interests: None to declare.

Keywords: snf, nursing homes, covid, medicaid, variational inference

JEL Classification: J11, J18, L15