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Nursing Homes can reap Financial Gain from
good report cards
Newswise, October 2010 — Nursing homes that
improve their quality of care – and thereby
score high on public report cards – might
see financial gains.
facilities receive a high or middle quality
ranking by the report cards after making
improvements, they can experience higher
revenues and profit margins, a new study
improvements in quality are not always
enough to boost a facility’s fortunes, the
researchers found. Nursing homes that
increased their score on the report cards,
but still ranked as low quality, did not get
the same financial benefits.
published online in the journal Health
Services Research, is one of the first to
examine the business case for quality
reporting and health facilities, according
to lead author Jeongyoung Park, Ph.D., of
the American Board of Internal Medicine and
researchers analyzed the financial
performance of nursing homes before and
after the Centers for Medicare and Medicaid
Services publicly began reporting the
quality of care at more than 6,000 Medicare
and Medicaid-certified nursing homes
throughout the United States.
Home Compare (NHC) report card, introduced
in 2002, measures how well the facilities do
in controlling their patients’ pain,
preventing bedsores, keeping their residents
active and other care concerns.
want solid evidence that quality pays,”
before spending money on quality
improvements, said Park, who noted that
for-profit companies own or operate most
U.S. nursing homes.
colleagues wanted to answer the question:
Does a good grade on a quality report card
mean more money for a nursing home?
answer is ‘yes.’ “Nursing homes that improve
on NHC measures are likely to increase
revenues under public reporting,” they
reporting might help people choose
high-quality nursing homes, which could in
turn drive the homes to improve their
quality to attract more residents, the
In the current
study, Park and colleagues found that the
improved facilities received most of their
financial gains from an increase in Medicare
and private-payer patients, who yield higher
profits to the facilities than Medicaid
well or improving on NHC measures may give
nursing homes an extra tool in attracting
the more desirable residents,” Park said.
this trend could further open up the gap
between high-quality and low-quality nursing
homes, the researchers said, since fewer
resources will go to the low- quality homes
that need the money to improve their care.
In a 2009
systematic review of 82 studies, McMaster
University professor of medicine Gordon
Guyat, M.D., and colleagues concluded that
nonprofit nursing homes are more likely to
deliver quality care than for-profit homes.
Guyat said in
a release that for-profit nursing homes
might “cut corners” when it comes to
spending money on quality care. “The reason
patients’ quality of care is inferior in
for-profit nursing homes is that
administrators must spend 10 percent to 15
percent of revenues satisfying shareholders
and paying taxes,” he said.
have looked at whether patients use report
cards such as the NHC to choose a nursing
home, but one recent survey suggested that
12 percent of new nursing home residents or
their families consulted the NHC Web site
before deciding on a facility.