Oversight of Nursing Homes: Pruning the Tree or Just Spotting Bad Apples?

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Abstract
Purpose: This study investigated whether higher rates of nursing home quality citations are associated with increased risk of voluntary and involuntary facility terminations from the Medicare/Medicaid certification process. Design and Methods: We examined nationwide Online Survey Certification and Reporting (OSCAR) data from 1992 through 2000 and used a multinomial logistic regression model with time-varying covariates to estimate the relationship between nursing home deficiencies and terminations. Results: In the study period, 8.7% of nursing homes voluntarily terminated and 2.4% of facilities were involuntarily terminated. Deficiencies significantly predicted both types of termination, controlling for state and market characteristics. Low occupancy and very high Medicaid mix were strongly related to voluntary and involuntary terminations (p <.05). Implications: Nursing homes that receive a high number of deficiencies exit the Medicare/Medicaid market and have lower occupancy rates before termination, although the relationship varies considerably across states. If competition on the basis of quality is increased because of public reporting efforts, our analyses suggest that terminations, both voluntary and involuntary, will likely increase.