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OBRA 1987 and the quality of nursing home care

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Abstract

Because minimum government standards for quality regulate only part of the market failure, they may have unintended effects. We present a general theory of how government regulation of quality of care may affect different market segments, and test the hypotheses for the nursing home market. OBRA 1987 was a sweeping government reform to improve the quality of nursing home care. We study how the effect of OBRA on the quality of nursing home care, measured by resident outcomes, varied with nursing home profitability. Using a semi-parametric method to control for the endogenous effects of regulation, we found that this landmark legislation had a negative effect on the quality of care in less profitable nursing homes, but improved the quality in more profitable nursing homes during the initial period after OBRA. But, this legislation had no statistically significant effect in the later period when the regulation was weakly enforced.

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Authors and Affiliations

  1. Westat, 1650 Research Boulevard, Room RE 380, Rockville, MD, 20850-3195, USA

    Virender Kumar

  2. Department of Health Policy and Administration, School of Public Health, University of North Carolina, Chapel Hill, NC, 27599, USA

    Edward C. Norton

  3. Agency for Healthcare Research and Quality, Rockville, MD, 20850, USA

    William E. Encinosa

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  1. Virender Kumar
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  2. Edward C. Norton
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  3. William E. Encinosa
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Correspondence to Virender Kumar.

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Kumar, V., Norton, E.C. & Encinosa, W.E. OBRA 1987 and the quality of nursing home care. Int J Health Care Finance Econ 6, 49–81 (2006). https://doi.org/10.1007/s10754-006-6862-9

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