Do Minimum Quality Standards Improve Quality of Care? A Case Study of the Nursing Home Industry

This paper examines minimum staffing requirements in the nursing home market using a unique national panel over the period from 1996-2005. It allows staffing requirements for licensed nurses and direct-care nurses to have differential impacts on the supply and quality of patient care. It finds that, given a half-hour increase in the minimum nursing hours per resident day for licensed nurses (double the average staffing requirement in the data), the quality of patient care increases by 25 percent. This quality-increasing effect is mainly driven by low-quality nursing homes increasing their quality of care to meet the new standards. In contrast, minimum staffing requirements for direct-care nurses do not have any significant impact on quality. This lack of impact may be explained by nursing home providers circumventing this regulation by hiring less expensive and less skilled laborers as substitutes for direct-care nurses