UMHEG Seminar Series: Do report cards predict future quality? The case of skilled nursing facilities

Friday 1 March 2019

The University of Melbourne Health Economics Group is a cross-faculty network of health economists based at the Faculty of Business and Economics and the School of Population and Global Health.

Presenter

Prof. Edward Norton University of Michigan

Edward C. Norton is a Professor in both the Department of Health Management and Policy and in the Department of Economics at the University of Michigan. In addition to his affiliations with the University of Michigan, Prof. Norton is a Research Associate of the National Bureau of Economic Research in the Health Economics Program. His research interests in health economics include long-term care and aging, pay-for-performance, obesity, and econometrics. He was the Director of the Robert Wood Johnson Foundation Scholars in Health Policy Research at the University of Michigan. In 2003, Before coming to Michigan, he taught at UNC at Chapel Hill and at Harvard Medical School. In 2018 he won the School of Public Health Excellence in Research Award at the University of Michigan.

Abstract

Report cards are intended to improve consumer decision-making and foster a market for quality. However, inadequate risk adjustment of report card measures often biases comparisons across firms. We test whether skilled nursing facility (SNF) star ratings causally predict the quality-related outcomes that are important to patients and providers. We examine to effect of an increase in the star rating of a chosen SNF after an inpatient hospital stay on the number of days spent in SNF, hospital, in the community with and without home health care, and deceased. To identify the causal effect of star rating on health care outcomes, we exploit variation over time in the distance from a patient’s residential ZIP code to SNFs. We found that patients who go to higher-rated SNFs achieved better outcomes, supporting the validity of the SNF report card ratings. A one-star increase is associated with a 5% decrease in mortality over 180 days after SNF admission, as well as 3.3% and 2.4% decrease in number of days spent in inpatient hospital and SNF care, respectively; and 4.0% and 2.5% increase in number of days spent at home in the community with and without home health care.