Has the medicare prospective payment system led to increased nursing home efficiency?

Health Services Research

Volumn 43, Issue 3, 2008, Pages 1043-1061

  Zhang, Ning Jackie ^a   Unruh, Lynn ^a   Wan, Thomas T H ^a  

^a UNIVERSITY OF CENTRAL FLORIDA   (United States)

Author keywords

BBA; DEA analysis of efficiency in nursing homes; Nurse staffing and nursing home efficiency; Nursing home efficiency; SNF PPS

Indexed keywords

ARTICLE; HEALTH CARE QUALITY; MEDICARE; NURSING HOME; NURSING HOME PERSONNEL; NURSING STAFF; POLICY; PRODUCTIVITY; PROSPECTIVE PAYMENT; UNITED STATES;

DATABASES AS TOPIC; EFFICIENCY, ORGANIZATIONAL; EVALUATION STUDIES AS TOPIC; LONGITUDINAL STUDIES; MEDICARE; PROSPECTIVE PAYMENT SYSTEM; SKILLED NURSING FACILITIES; UNITED STATES;

EID: 43049100046     PISSN: 00179124     EISSN: 14756773     Source Type: Journal    
DOI: 10.1111/j.1475-6773.2007.00798.x     Document Type: Article

References (49)

1. Anderson, R. I., B. K. Hobbs, H. S. Weeks J. R. Webb. 2005 Quality of Care and Nursing Home Cost-Efficiency Research Journal of Real Estate Literature 13 (3) : 325 35.
2. Anderson, R. I., D. Lewis J. R. Webb. 1999 The Efficiency of Nursing Home Chains and the Implications of Non-Profit Status Journal of Real Estate Portfolio Management 5 (3) : 235 45.
3. Banker, R. D., A. Charnes W. Cooper. 1984 Models for Estimation of Technical and Scale Inefficiencies in Data Envelopment Analysis Management of Science 30 : 1078 92.
4. Braeutigam, R. R. M. V. Pauly. 1986 Cost Function Estimation and Quality Bias: The Regulated Automobile Insurance Industry Rand Journal of Economics 17 (4) : 606 17.
5. Brown, H. S. III. 2003 Managed Care and Technical Efficiency Health Economics 12 (2) : 149 58.
6. Centers for Medicare and Medicaid Services. 1999. "Testimony of Michael Hash, Deputy Administrator Health Care Financing Administration on Balanced Budget Act Impact on Patient Care before the House Commerce Subcommittee on Health" [accessed on March 29, 2007]. Available at
7. Charnes, A., W. W. Cooper E. Phodes. 1978 Measuring the Efficiency of Decision Making Units Euorpean Journal of Operational Research 2 : 429 44.
8. Chattopadhyay, S. D. Heffley. 1994 Are For-Profit Nursing Homes More Efficient? Data Envelopment Analysis with a Case-Mix Constraint Eastern Economics Journal 20 : 173 88.
9. Chen, L. W. D. G. Shea. 2004 The Economies of Scale for Nursing Home Care Medical Care Research and Review 61 (1) : 38 63.
10. Chern, J. Y. T. T. H. Wan. 2000 The Impact of the Prospective Payment System on the Technical Efficiency of Hospitals Journal of Medical Systems 24 (3) : 159 71.
11. Cohen, J. W. L. C. Dubay. 1990 The Effects of Medicaid Reimbursement Method and Ownership on Nursing Home Costs, Case Mix, and Staffing Inquiry 27 (2) : 183 200.
12. Cowles, C. M. 2002. Nursing Home Statistical Yearbook (2002). Montgomery Village, MD : Cowles Research Group.
13. Feng, Z., D. C. Grabowski, O. Intrator V. Mor. 2006 The Effect of State Medicaid Case-Mix Payment on Nursing Home Resident Acuity Health Services Research 41 (4) : 1317 35.
14. Fizel, J. L. T. S. Nunnikhoven. 1992 Technical Efficiency of For-Profit and Non-Profit Nursing Homes Managerial and Decision Economics 13 (5) : 429 39.
15. Fizel, J. L. T. S. Nunnikhoven. 1993 The Efficiency of Nursing Home Chains Applied Economics 25 : 49 55.
16. GAO. 2002a. "Skilled Nursing Facilities: Available Data Show Average Nursing Staff Time Changed Little after Medicare Payment Increase" [GAO-03-176] [accessed on March 29, 2007]. Available at
17. GAO. 2002b. "Skilled Nursing Facilities: Medicare Payments Exceed Costs for Most But Not All Facilities" [GAO-03-183] [accessed on March 29, 2007]. Available at
18. GAO. 2005. "Nursing Homes Despite Increased Oversight, Challenges Remain in Ensuring High-Quality Care and Resident Safety." [GAO-06-117] [accessed on March 29, 2007]. Available at
19. Gertler, P. J. D. M. Waldman. 1992 Quality-adjusted Cost Functions and Policy Evaluation in the Nursing Home Industry Journal of Political Economy 100 (6) : 1232 56.
20. Grabowski, D. C., Z. Feng, O. Intrator V. Mor. 2004 Recent Trends in State Nursing Home Payment Policies Health Affairs, Web Exclusive, June 16, 2004, 363 73.
21. Greene, W. 2002. LIMDEP (Version 8.0). Reference Guide. Plainview, NY : Econometric Software Inc.
22. Harris, J., H. Ozgen Y. Ozcan. 2000 Do Mergers Enhance the Performance of Hospital Efficiency? Journal of the Operational Research Society 51 : 801 11.
23. Knox, K. J., E. C. Blankmeyer J. R. Stutzman. 1999 Relative Economic Efficiency in Texas Nursing Facilities: A Profit Function Analysis Journal of Economics and Finance 23 (3) : 199 213.
24. Knox, K. J., E. C. Blankmeyer J. R. Stutzman. 2001 The Efficiency of Nursing Home Chains and the Implications of Nonprofit Status: A Comment Journal of Real Estate Portfolio Management 7 (2) : 177 82.
25. Konetzka, R. T., E. C. Norton K. E. Kilpatrick. 2004 The Effects of Medicare Payment Changes on Nursing Home Staffing and Deficiencies Health Services Research 39 (3) : 463 87.
26. Kooreman, P. 1994 Nursing Home Care in the Netherlands: A Nonparametric Efficiency Analysis Journal of Health Economics 13 : 307 16.
27. Lee, S. K. G. Turnbull. 2001 Wound Care in a PPS Environment: Cost-effective Care Has Assumed Paramount Importance Nursing Homes Long Term Care Management 50 (3) : 34 37.
28. Leibenstein, H. 1966 Allocative Efficiency vs. 'X-Efficiency.' American Economic Review 56 : 392 415.
29. Leibenstein, H. S. Maital. 1992 Empirical Estimation and Partitioning of X-Inefficiency: A Data-Envelopment Approach American Economic Review 82 (2) : 428 33.
30. Matthews-Martin, L., P. Gruhn, F. Decker, American Health Care Association. 2003. "Comparing Nursing Home Quality and Performance: An Evaluation of the Basic Method in Nursing Home Ranking Systems" [accessed on April 11, 2007]. Available at
31. Mueller, C. 2002 Quality Care in Nursing Homes: When the Resources Aren't There Journal of the American Geriatrics Society 50 (8) : 1458 60.
32. Murray, P. K. 2005 Rehabilitation Services after the Implementation of the Nursing Home Prospective Payments System: Differences Related to the Patient and Nursing Home Characteristics Medical Care 43 (11) : 1109 15.
33. Nyman, J. A. D. L. Bricker. 1989 Profit Incentives and Technical Efficiency in the Production of Nursing Home Care Review of Economics and Statistics 71 (4) : 586 94.
34. Nyman, J. A., D. L. Bricker D. Link. 1990 Technical Efficiency in Nursing Homes Medical Care 28 (6) : 541 51.
35. Ozcan, Y. A. H. Ozgen. 2002 A National Study of Efficiency for Dialysis Centers: An Examination of Market Competition and Facility Characteristics for Production of Multiple Dialysis Output Health Services Research 37 (3) : 711 31.
36. Ozcan, Y. A., S. E. Wogen L. W. Mau. 1998 Efficiency Evaluation of Skilled Nursing Facilities Journal of Medical Systems 22 (4) : 211 23.
37. Rosko, M. D., J. A. Chilingerian, J. S. Zinn W. E. Aaronson. 1995 The Effects of Ownership, Operating Environment, and Strategic Choices on Nursing Home Efficiency Medical Care 33 (10) : 1001 21.
38. Seiford, L. M. R. M. Thrall. 1990 Recent Development in DEA: The Mathematical Programming Approach to Frontier Analysis Journal of Econometrics 46 : 7 38.
39. Sexton, T. R., A. M. Leiken, S. Sleeper A. F. Coburn. 1989 The Impact of Prospective Reimbursement on Nursing Home Efficiency Medical Care 27 (2) : 154 63.
40. Siddharthan, K., M. Ahern R. Rosenman. 2000 Data Envelopment Analysis to Determine Efficiencies of Health Maintenance Organizations Health Care Management Sciences 3 : 23 29.
41. Simar, L. P. W. Wilson. 2000 Statistical Inference in Nonparametric Frontier Models: The State of the Art Journal of Productivity Analysis 13 : 49 78.
42. Simar, L. P. W. Wilson. 2006 Statistical Inference in Nonparametric Frontier Models: Recent Developments and Perspectives In In the Measurement of Productive Efficiency, 2d Edition, edited by H. Fried, C. A. K. Lovell S. S. Schmidt, Chapter 4. Oxford : Oxford University Press.
43. Simar, L. P. W. Wilson. 2007 Estimation and Inference in Two-Stage, Semi-Parametric Models of Production Processes Journal of Econometrics 136 : 31 64.
44. Unruh, L., N. J. Zhang T. H. Wan. 2006 The Impact of Medicare Reimbursement Changes on Staffing and the Quality of Care in Nursing Homes International Journal of Public Policy 1 (4) : 421 34.
45. Valdmanis, V. G. 1990 Ownership and Technical Efficiency of Hospitals Medical Care 28 (6) : 552 9.
46. Wilson, P. W. 2006. FEAR 1.0 Command Reference. Austin, TX : Department of Economics, University of Texas.
47. Worthington, A. C. 2004 Frontier Efficiency Measurement in Health Care: A Review of Empirical Techniques and Selected Applications Medical Research and Review 61 (2) : 135 70.
48. Zhang, Y. R. Bartels. 1998 The Effect of Sample Size on the Mean Efficiency in DEA with an Application to Electricity Distribution in Australia, Sweden and New Zealand Journal of Productivity Analysis 9 : 187 204.
49. Zhang, N. J., L. Unruh, R. Liu T. T. Wan. 2006 Minimum Nurse Staffing Ratios for Nursing Homes Nursing Economics 24 (2) : 78 93.