Performing Well on Nursing Home Report Cards: Does It Pay Off?

OBJECTIVE: To examine whether high performance or improvement on quality measures leads to economic rewards for nursing homes in the presence of public reporting. DATA SOURCES: Data from 6,286 freestanding Medicare-certified nursing homes between 1999 and 2005 were identified in Medicare Cost Reports, Minimum Data Set, and Online Survey and Certification Reporting System. STUDY DESIGN: Using a facility-level fixed-effects model, the effect of public reporting on financial performance was measured by comparing each of four financial outcomes (revenues, expenses, operating, and total profit margins) before (1999-2002) to after (2003-2005) public reporting was initiated. The effects were estimated separately by level of performance and improvement over time. PRINCIPAL FINDINGS: Facilities that improved on publicly reported performance had increased revenues and higher profit margins after public reporting, mainly through increased Medicare admissions. High-scoring facilities showed similar patterns, though differences were not statistically significant. CONCLUSIONS: Providers that improve their performance under public reporting may receive a return on their investment in quality improvement. This supports the business case for public reporting.