Higher prices, higher quality? Evidence from German nursing homes

Health Policy
Annika Herr, Hanna Hottenrott

Abstract

This study investigates the relationship between prices and quality of 7400 German nursing homes. We use a cross section of public quality reports for all German nursing homes, which had been evaluated between 2010 and 2013 by external institutions. Our analysis is based on multivariate regressions in a two stage least squares framework, where we instrument prices to explain their effect on quality controlling for income, nursing home density, demographics, labour market characteristics, and infrastructure at the regional level. Descriptive analysis shows that prices and quality do not only vary across nursing homes, but also across counties and federal states and that quality and prices correlate positively. Second, the econometric analysis, which accounts for the endogenous relation between negotiated price and reported quality, shows that quality indeed positively depends on prices. In addition, more places in nursing homes per people in need are correlated with both lower prices and higher quality. Finally, unobserved factors at the federal state level capture some of the variation of reported quality across nursing homes. Our results suggest that higher prices increase quality. Furthermore, since reported quality and price...Continue Reading

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Feb 4, 2014·Journal of Health Economics·Julien Forder, Stephen Allan

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Citations

Feb 8, 2016·Health Policy·Leonie Sundmacher, Reinhard Busse
Sep 28, 2016·Health Policy·Annika HerrHendrik Schmitz
May 18, 2017·Health Economics·Arndt R Reichert, Magdalena A Stroka
Mar 2, 2017·Health Care Management Science·Rajendra Dulal

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