Nursing Home Closures, Changes in Ownership, and Competition

Abstract

This research examines the relationship of competition among nursing homes and the likelihood of their closure or change in ownership. The study uses nationally representative data from the 1992–1998 Online Survey, Certification, and Reporting system, and is supplemented with several other primary and secondary data sources. It is hypothesized that facilities located in more competitive environments will be more likely to close. Multinomial logistic regression analyses are employed to examine this hypothesis in a model containing organizational and aggregate resident characteristics, and market factors. The Herfindahl index is used as a measure of competition. The descriptive analysis shows that 621 nursing homes closed and 6,471 changed ownership from 1992 to 1998. The incidence rate of closures was .7% of facilities per year. The multivariate analysis shows that facilities located in more competitive environments were significantly more likely to close.