Do Report Cards Predict Future Quality? The Case of Skilled Nursing Facilities

Report cards on provider performance are intended to improve consumer decision-making and address information gaps in the market for quality. However, inadequate risk adjustment of report-card measures often biases comparisons across providers. We test whether going to a skilled nursing facility (SNF) with a higher star rating affects outcomes for a patient. We exploit variation over time in the distance from a patient's residential ZIP code to SNFs with different ratings to estimate the causal effect of admission to a higher-rated SNF on health care outcomes, including mortality. We found that patients who go to higher-rated SNFs experience lower mortality, fewer days in the nursing home, and fewer hospital readmissions.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at "http://www.nber.org/papers/w25940"