Saturday, December 20, 2008

Nonprofit vs. For-Profit Nursing Home Quality

One of the perennial arguments regarding tax-exemption for nonprofit health care providers has centered on whether nonprofits provide "better" services in some way than for-profit providers. This question has been the subject of countless empirical studies which have provided largely mixed results depending on what exactly is being studied, by whom, and how. I have discussed some of the conflicting evidence in an article published in the Journal of Health Poliitics, Policy and Law (JHPPL, as it is widely known) in 2006 (Vol. 31, pages 623-642, available here, subscription required).

Now a new government rating of nursing homes is sure to add fuel to the fire. On Thursday, the Centers for Medicare and Medicaid Services released their first "star" ratings (from one to five stars) of nursing homes based on health inspection surveys, staffing information and quality-of-care measures. Individuals can view these ratings and the measures used in the rating system via the Medicare web site here.

As this report in today's Buffalo News indicates, the is no systematic difference in these ratings among nonprofit, for-profit and public facilities. The Buffalo News article notes that among the 81 nursing homes in western New York, the one-star (lowest-ranked) facilities included seven for-profit, four nonprofit and three public institutions, while the five-star (highest-ranked) facilities included seven for-profit, four nonprofit and one public operation.

As with all ranking systems, one can argue over the methodology, and some of those arguments are detailed in the Buffalo News story. Nevertheless, the fact that this first comprehensive rating of nursing homes found little to distinguish nonprofit facilities from for-profit ones is another data point in the debate over tax-exemption for nonprofit health care providers (although admittedly nursing homes provide many other services than just health care). If we're not getting better services from exempt nonprofits or more help for the poor (an issue of much debate with respect to hospitals, as the prior blog entry on Grassley's proposed legislation indicates), then just what ARE we getting?


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