Regulating the Bed Supply in Nursing Homes

Federal and state regulation of capital expenditures has been advanced as a means both to ensure rational allocation of resources and to control costs. But evidence drawn from eight states suggests that limiting the supply of nursing home beds ("certificate of need"), without refining conflicting standards of eligibility, quality control, and reimbursement policies (Medicaid and "rate-setting"), effectively discriminates against persons most in need of medical care. Alternative strategies for achieving economy, equity, and efficiency are explored.