In general, people prefer to buy high quality products and services, but the average consumer has a hard time evaluating quality, especially in a complex area like medical services. Governments and health payers have stepped in to force providers to provide data related to quality. A common method for trying to give patients quality information regarding providers is use of report cards and star ratings. Medicare uses these for a variety of providers, including skilled nursing facilities. Quality measures theoretically should identify information that is clearly linked to better health outcomes for patients. And since the quality scores are constructed from past performance, you have to make an assumption that future performance will be the same in order for the data to be helpful in selecting a provider. Researchers looked at whether Medicare’s report card and ratings for skilled nursing facilities would help patients find an institution that would likely deliver a better outcome for them. (NBER Paper) CMS gives each skilled nursing facility a “star” rating from 1 to 5 based on its composite score on quality outcomes and patient satisfaction measures. The researchers attempt to ascertain whether a facility’s star rating was related to patient mortality, length of stay and hospital readmissions. In a somewhat confusing attempt to avoid patient selection issues, the authors used distance from various nursing facilities as a factor in the analysis, to avoid apparent effects caused by a patient just going to whatever facility was closest to their residence.
Data on SNF admissions for Medicare beneficiaries in 2012 and 2013 were used for the study. Patients were followed for six months following the SNF admission. These are fairly sick patients; in the 180 day period, 54% were hospitalized at least once, 21% died and 16% spent over 100 days in the nursing facility. They spent an average of 48 days in the institution. The analysis included the usual demographic and health status adjustments. Going to a higher star-rated facility was associated with nominally small, but statistically significant decreases in mortality, SNF facility stay length, and likelihood of readmission to a hospital. This suggests that star ratings, based on past performance, can be accurate in guiding people to institutions where they are likely to have better outcomes. One difficult consideration is that patients are often not making the choice about where to go. Physicians, discharge planners at hospitals, or family and other informal caregivers may have more of a role in those decisions, particularly when a patient is very ill. So getting information to the actual decision-maker and creating a financial incentive for selecting a higher-quality SNF would be important.