Do Owner-Managers at Nursing Facilities Provide Higher Quality? An - - PowerPoint PPT Presentation

John R. Bowblis

Farmer School of Business and Scripps Gerontology Center

Do Owner-Managers at Nursing Facilities Provide Higher Quality? An Application of Instrumental Variables

Acknowledgements

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Co-author: Sean Shenghsiu Huang from Georgetown University

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We thank the Ohio Department of Job and Family Services and the Scripps Gerontology Center for providing access to some of the data used in this paper.

Background

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In a mixed mode economy, there is competition among for-profit, not-for-profit, and government healthcare providers

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Extensive literature compares each ownership type

» Methods generally use a broad-brushed approach which ignores

the heterogeneity within each ownership type

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This paper focuses on a type of heterogeneity among for-profits

» Specifically, the role of owner-managers

Research Question

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Among for-profits any residual profit is shared among owners:

» An owner-manager is an administrator with a significant equity

interest in the facility – claim to residual profit

»

Is the quality of care provided at for-profits that are operated by

• wner-managers different from for-profits that are not operated by
• wner-managers?

» Examine the nursing home (NH) industry

Conceptual Model: Owner-managers

Mechanisms Increasing Quality

1.

Directly observe problems; faster response

2.

Greater flexibility and control, leading to faster adoption of efforts to improve quality

3.

Personal reputation impacted Mechanisms Lowering Quality

1.

Greater flexibility and control can lead the owner to override

• ther staff members’ decisions

2.

Increases focus on the bottom line (e.g. profits) Hypothesis: Unclear whether owner-managers provide better quality (among for-profit NHs).

Dataset

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Utilize Ohio data from 2005 through 2010:

» Ohio Medicaid Cost Reports » OSCAR data » Minimum Data Set (v2.0) » Area Health Resource File »

Unit of observation is long-stay resident-assessment (N=787,714)

» Key variable of interest: Indicator whether facility is operated by

• wner-manager - key administrator or relative has at least 5%

equity ownership in the facility.

Empirical Strategy (1)

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Dependent variables:

» 11 long-stay quality measures utilized by CMS’ NH Compare

Website (e.g. catheter use, pain, pressure ulcers, falls, etc.)

» 4 long-stay quality measures not utilized by CMS’ NH Compare

(e.g., contractures, rash, antipsychotic and hypnotic medication)

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Resident, facility, and county level controls:

» Resident: Age, gender, cognitive and physical status; Facility:

number of beds, chain, occupancy rate, payer-mix, staffing, rural/urban; County: demographics, competition

Empirical Strategy (2)

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Potential endogeneity between quality and owner-managers, as unobserved factors may influence the NH selection

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Utilize an instrumental variables approach called 2SRI

» Requires variable that explains decision to choose an owner-

manager NH but not quality

» Follow literature and use differential distance between closest

for-profit NH with and without an owner-manager

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F-statistic = 5763.72; Balanced observable characteristics

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McCellan et al., 1994; Gowrisankaran and Town, 1999; Bowblis and McHone, 2013; Grabowski et al 2013; Bowblis, Brunt, Grabowski 2016; Rahman, Norton, Grabowski (2016)

Key findings 1. Endogeneity matters (2SRI) 2. Owner-managers have better quality in 12 of 15 quality measures 3. Among 7 statistically significant measures, 5 indicate better quality, two indicate worse quality 4. Generally, owner-managers have better quality

Long-Stay Quality Measure Logit 2SRI Logit Publically Reported Quality Measures Decline in Physical Functioning

• 0.006***
• 0.008

Catheter Use 0.005**

• 0.012

Moderate-Severe Pain

• 0.005***
• 0.012

Mostly Bed or Chairfast 0.005***

• 0.014**

Bowel/Bladder Incontinence 0.021*** 0.046*** Physically Restrained

• 0.008***
• 0.021***

Urinary Tract Infection

• 0.002
• 0.018***

Weight Loss

• 0.007***
• 0.013***

Pressure Ulcers (Low Risk Resident) 0.001

• 0.004

Pressure Ulcers (High Risk Resident)

• 0.000

0.003 Falls with Major Injury

• 0.005***
• 0.034***

Non-Publically Reported Quality Measures Contractures 0.080*** 0.185*** Rash

• 0.008***
• 0.009

Antipsychotic Medication

• 0.000
• 0.017

Hypnotic Medication

• 0.002
• 0.001

*** p<0.01, ** p<0.05, * p<0.1 Marginal Effect of Residing in a For-profit with a Owner-Manager

Heterogeneous Effects (1)

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Most owner-managers are in free-standing facilities

» Examine FPs that are non-chains only

Key findings 1. Effect for bowel/bladder incontinence is now not statistically significant 2. Other effects are a little weaker, but owner- managers still generally provide better quality of care

Long-Stay Quality Measure Baseline (2SRI Logit) Non-Chains Only Publically Reported Quality Measures Decline in Physical Functioning

• 0.008
• 0.005

Catheter Use

• 0.012
• 0.006

Moderate-Severe Pain

• 0.012

0.000 Mostly Bed or Chairfast

• 0.014**
• 0.003

Bowel/Bladder Incontinence 0.046*** 0.020 Physically Restrained

• 0.021***
• 0.012*

Urinary Tract Infection

• 0.018***
• 0.014***

Weight Loss

• 0.013***
• 0.009**

Pressure Ulcers (Low Risk Resident)

• 0.004
• 0.000

Pressure Ulcers (High Risk Resident) 0.003

• 0.010

Falls with Major Injury

• 0.034***
• 0.022***

Non-Publically Reported Quality Measures Contractures 0.185*** 0.119*** Rash

• 0.009
• 0.006

Antipsychotic Medication

• 0.017
• 0.009

Hypnotic Medication

• 0.001
• 0.000

*** p<0.01, ** p<0.05, * p<0.1 Regressions using 2SRI Marginal Effect of Residing in a For-profit with a Owner-Manager

Heterogeneous Effects (2)

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Reputation is more important or profits may be larger if there are fewer competitors

» Hypothesis: If owner-managers care about long-run profits,

effects could be larger in less competitive markets.

»

Examine if effects vary by different in by level of competition

» Less competitive: Counties with <= 10 NHs (66 of 88 counties) » More competitive: Counties with 60+ NHs (Cuyahoga & Hamilton

counties)

Key findings 1. Owner-managers have better quality in less and more competitive markets 2. Statistically significant results are more concentrated in less competitive markets

Long-Stay Quality Measure Baseline (2SRI Logit) Less Competitive Markets More Competitive Markets Publically Reported Quality Measures Decline in Physical Functioning

• 0.008

0.015**

• 0.022

Catheter Use

• 0.012
• 0.018*

0.004 Moderate-Severe Pain

• 0.012
• 0.044***

0.028 Mostly Bed or Chairfast

• 0.014**
• 0.018**
• 0.017

Bowel/Bladder Incontinence 0.046*** 0.070***

• 0.015

Physically Restrained

• 0.021***
• 0.021**

0.003 Urinary Tract Infection

• 0.018***
• 0.033***
• 0.069***

Weight Loss

• 0.013***
• 0.022***
• 0.022

Pressure Ulcers (Low Risk Resident)

• 0.004
• 0.002
• 0.024

Pressure Ulcers (High Risk Resident) 0.003 0.002

• 0.091***

Falls with Major Injury

• 0.034***
• 0.043***
• 0.042**

Non-Publically Reported Quality Measures Contractures 0.185*** 0.204***

• 0.010

Rash

• 0.009
• 0.018

0.064** Antipsychotic Medication

• 0.017
• 0.003
• 0.156***

Hypnotic Medication

• 0.001
• 0.011
• 0.007

*** p<0.01, ** p<0.05, * p<0.1 Regressions using 2SRI Marginal Effect of Residing in a For-profit with a Owner-Manager

Robustness Checks

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Four separate robustness check performed:

» Restricted to NHs with same ownership structure 3+ years » Exclude nurse staffing as controls » Resident used a NH in a zip code different from home zip code » Examine only NHs in urban areas »

Results are consistent with Baseline 2SRI Logit models

Conclusions

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Effect of owner-managers is theoretically ambiguous

»

Findings:

» Owner-managers have higher quality of care compared to for-

profits without an owner-managers

» Effect more concentrated in less competitive markets

Limitations

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Examine only state of Ohio

» Owner-manager is defined as having at least 5% equity position

(cannot identify exact ownership interest)

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Limited number of non-publically reported quality measures

» Do not have measures of quality of life »

Qualitative research is needed to identify specific mechanisms that drive the results

Implications

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Suggests that owner-managers may use the greater control power to increase quality:

» Develop longer-term reputation – drives long-run quality and

lower cost of customer acquisition

» May be better able to address problems as they arise »

Suggests the broad label “for-profit” is more complex than previously thought