The Relationship Between Nursing Home Quality and Costs: Evidence from the VA

Kathleen Carey
Shibei Zhao
A. Lynn Snow
Christine W. Hartmann
Peer-Reviewed Article
April 2018
Cover of "The Relationship between Nursing Home Quality and Cost: Evidence from the VA"


Analysis of Veterans Health Administration nursing home cost and quality data shows association between higher quality of care and greater overall patient costs.


Ensuring high-quality care in nursing homes is essential to meeting the physical and emotional needs of residents. While delivering such care often requires more resources, it can also minimize downstream patient costs by reducing the risk of adverse outcomes. The potential tradeoff between quality of care and associated costs is a significant concern for policymakers and other health system stakeholders, especially amidst rising health care spending and an expected rise in the number of individuals who will require long-term services and supports. This study assessed the relationship between quality of nursing home care and overall costs.     


The study revealed a positive association between quality of care and per-patient costs in delivering care. Drawing on cost and quality data from 132 Veterans Health Administration (VA) nursing homes, known as community living centers (CLCs), the authors evaluated the relationship between overall costs and a composite quality measure, reflecting the likelihood of adverse patient events in a CLC. CLCs in the lowest quartile of quality scores exhibited 6.4 percent lower overall patient costs compared to those in the highest quartile. The authors also noted that the VA’s approach to documenting costs allows for more accurate cost assessments than most other health systems, adding further credence to these findings.


While the study’s findings suggest that higher quality of care is associated with greater overall costs, this insight must be considered within the context of goals to improve quality for a population with a diverse set of needs. This study was also not designed as a full cost-benefit analysis. Health care stakeholders will likely wish to account for patient outcomes and other potential benefits when considering investments in higher quality nursing home care.

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