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Quality rating and private-prices: Evidence from the nursing home industry

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  • Huang, Sean Shenghsiu
  • Hirth, Richard A.

Abstract

We use the rollout of the five-star rating of nursing homes to study how private-pay prices respond to quality rating. We find that star rating increases the price differential between top- and bottom-ranked facilities. On average, prices of top-ranked facilities increased by 4.8 to 6.0 percent more than the prices of bottom-ranked facilities. We find stronger price effects in markets that are less concentrated where consumers may have more choices of alternative nursing homes. Our results suggest that with simplified design and when markets are less concentrated, consumers are more responsive to quality reporting.

Suggested Citation

  • Huang, Sean Shenghsiu & Hirth, Richard A., 2016. "Quality rating and private-prices: Evidence from the nursing home industry," Journal of Health Economics, Elsevier, vol. 50(C), pages 59-70.
    • Handle: RePEc:eee:jhecon:v:50:y:2016:i:c:p:59-70
    DOI: 10.1016/j.jhealeco.2016.08.007
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    References listed on IDEAS

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    1. Michael Darden & Ian M. McCarthy, 2015. "The Star Treatment: Estimating the Impact of Star Ratings on Medicare Advantage Enrollments," Journal of Human Resources, University of Wisconsin Press, vol. 50(4), pages 980-1008.
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    Cited by:

    1. Bingxiao Wu & Jeah Jung & Hyunjee Kim & Daniel Polsky, 2019. "Entry regulation and the effect of public reporting: Evidence from Home Health Compare," Health Economics, John Wiley & Sons, Ltd., vol. 28(4), pages 492-516, April.
    2. Sean Shenghsiu Huang & Richard A. Hirth & Jane Banaszak-Holl & Stephanie Yuan, 2017. "The Growth and Geographical Variation of Nursing Home Self-Pay Prices," Working Papers wp397, University of Michigan, Michigan Retirement Research Center.
    3. Ian M. McCarthy & Michael Darden, 2017. "Supply-Side Responses to Public Quality Ratings: Evidence from Medicare Advantage," American Journal of Health Economics, MIT Press, vol. 3(2), pages 140-164, Spring.
    4. Robert L. Ohsfeldt & Pengxiang Li, 2018. "State entry regulation and home health agency quality ratings," Journal of Regulatory Economics, Springer, vol. 53(1), pages 1-19, February.
    5. Avi Dor & William Encinosa & Kathleen Carey, 2020. "Hospital performance standards and medical pricing: The impact of information disclosure in cardiac care," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(3), pages 492-515, July.
    6. McCarthy, Ian M., 2018. "Quality disclosure and the timing of insurers’ adjustments: Evidence from medicare advantage," Journal of Health Economics, Elsevier, vol. 61(C), pages 13-26.
    7. Susan Feng Lu & Konstantinos Serfes & Gerard Wedig & Bingxiao Wu, 2021. "Does Competition Improve Service Quality? The Case of Nursing Homes Where Public and Private Payers Coexist," Management Science, INFORMS, vol. 67(10), pages 6493-6512, October.
    8. Jinyang Chen & Chaoqun Wang, 2023. "“The reputation premium”: does hospital ranking improvement lead to a higher healthcare spending?," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 24(5), pages 817-830, July.

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    More about this item

    Keywords

    Market competition; Nursing home; Price; Public reporting; Quality rating;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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