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Market structure, competition from assisted living facilities and quality in the nursing home industry


The oldest of the U.S. baby boomers turned 65 in 2011, inaugurating a new era of challenges for the country’s long-term care system. In response to this ongoing demographic shift, the nursing home industry has introduced assisted living facilities that can accommodate a range of lesser ailments — and potentially attract healthier and wealthier residents. How this expansion may indirectly influence the quality of care provided by the nursing homes is unclear.

A 2010 study from Harvard Medical School published in Health Affairs, “Sizing Up the Market for Assisted Living,” notes that by 2007 the industry had grown to nearly 40,000 facilities nationwide sited along clear socioeconomic lines: “In the counties with no [assisted living] facilities, rates of college educational attainment are much lower (13.8% versus 19.9%), median household incomes are much lower ($35,379 versus $43,034), median home values are much lower ($69,560 versus $98,541), and rates of minorities in the population are much higher (17.1% versus 12.8%), compared with counties in the highest quartile.”

A 2012 study from Miami University published in Applied Economic Perspectives and Policy, “Market Structure, Competition from Assisted Living Facilities and Quality in the Nursing Home Industry,” examines how competition from assisted living facilities impacts the quality of nursing home care. The researcher analyzed data from 88 nursing home markets in Ohio (defined by county) in 1999 and 2005 to determine how long-term residents, the institutions they live at, their location and the overall supply of care beds may affect overall patient well-being.

Key study findings include:

  • As the number of assisted living beds in Ohio increased by four for every 1,000 residents from 1999 to 2005, the number of assisted living facilities did not have a statistically significant effect on overall nursing home quality. However, the percentages of nursing home residents with bedsores increased 5.5%, while the number of patients treated using antipsychotic medications rose 30.5%. At the same time, the use of catheters fell 0.05% and the employment of physical restraints dropped 3.1%.
  • “Higher market concentration is associated with higher quality as measured by having fewer regulatory deficiencies and a lower proportion of residents with bedsores, catheters and feeding tubes. However, nursing homes are also found to have worse quality in more concentrated markets as measured by the mix of nurse staffing and the proportion of residents who are physically restrained.”
  • More assisted living beds are associated with a decrease in the use of antipsychotic medications in nursing homes, but this decrease is likely due to the availability of assisted living beds raising the age at which residents are admitted to nursing homes; those who are more infirm are less likely to need these medications to prevent harm to themselves or to others.

The author concludes that market competition produces mixed effects on the quality of nursing home care suggests that “licensure of new assisted living facilities should take into account the potentially negative consequences to other long-term care providers.”

In related scholarship, a 2011 study in Health Services Research, “Does Information Matter? Competition, Quality and the Impact of Nursing Home Report Cards,” found that increasing public information about nursing home quality does not necessarily create better outcomes at facilities. However, the researchers found that “nursing homes residing in more competitive markets improved their reported quality more than facilities in less competitive markets.”

Tags: aging, medicine

    Writer: | Last updated: April 25, 2012

    Citation: Bowblis, John R. "Market Structure, Competition from Assisted Living Facilities, and Quality in the Nursing Home Industry," Applied Economic Perspectives and Policy, February 28, 2012, doi: 10.1093/aepp/pps006.

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    Newswriting and digital reporting assignments

    1. Write a lead, headline or nut graph based on the study.
    2. Spend 60 minutes exploring the issue by accessing sources of information other than the study. Write a lead (or headline or nut graph) based on the study but informed by the new information. Does the new information significantly change what one would write based on the study alone?
    3. Compose two Twitter messages of 140 characters or fewer accurately conveying the study’s findings to a general audience. Make sure to use appropriate hashtags.
    4. Choose several key quotations from the study and show how they would be set up and used in a brief blog post.
    5. Map out the structure for a 60-second video segment about the study. What combination of study findings and visual aids could be used?
    6. Find pictures and graphics that might run with a story about the study. If appropriate, also find two related videos to embed in an online posting. Be sure to evaluate the credibility and appropriateness of any materials you would aggregate and repurpose.

    Class discussion questions

    1. What is the study’s most important finding?
    2. Would members of the public intuitively understand the study’s findings? If not, what would be the most effective way to relate them?
    3. What kinds of knowledgeable sources you would interview to report the study in context?
    4. How could the study be “localized” and shown to have community implications?
    5. How might the study be explained through the stories of representative individuals? What kinds of people might a reporter feature to make such a story about the study come alive?
    6. What sorts of stories might be generated out of secondary information or ideas discussed in the study?

    Study analysis

    Read the study titled “Market Structure, Competition from Assisted Living Facilities and Quality in the Nursing Home Industry.”

    1. What are the study's key technical term(s)? Which ones need to be put into language a lay audience can understand?
    2. Do the study’s authors put the research into context and show how they are advancing the state of knowledge about the subject? If so, what did the previous research indicate?
    3. What is the study’s research method? If there are statistical results, how did the scholars arrive at them?
    4. Evaluate the study's limitations. (For example, are there weaknesses in the study's data or research design?)
    5. How could the findings be misreported or misinterpreted by a reporter? In other words, what are the difficulties in conveying the data accurately? Give an example of a faulty headline or story lead.

    Read the issue-related Philadelpia Inquirer article titled "Senior-housing Market is Booming."

    1. What key insights from the study and journal article should reporters be aware of as they cover issues relating to the increase of assisted living facilities and nursing home care?