Access Type

Open Access Dissertation

Date of Award

January 2016

Degree Type


Degree Name




First Advisor

Allen C. Goodman


Chapter 1 examines the determinants of nursing home costs and cost efficiency, and investigates how various measures of nursing home care quality influence both of these. It applies a one-step stochastic frontier approach to a large panel of California nursing homes surveyed between 2009 and 2013. Quality is measured by three different ratings available on the Nursing Home Compare website: rating on quality measures, rating on the health inspection, and rating on staffing levels. Results show that the rating on quality measures, an outcome-based measure of quality, is inversely related to costs but unrelated to mean cost efficiency. In other words, a better rating on quality measures is associated with lower nursing home costs. The health inspection rating is not associated with either costs or mean cost efficiency. The rating for staffing levels, a structural measure of quality, is negatively associated with cost efficiency. These findings reveal that different measures of quality have different relationships with costs and cost efficiency. The findings suggest that better quality outcomes in nursing homes may be achievable with fewer resources and/or improved care procedures, which in turn should reduce nursing home costs.

Chapter 2 investigates the relationships between three recently launched five-star quality ratings and technical efficiency of nursing homes. It employs an input-oriented two-stage data envelopment analysis in a sample of 338 nursing homes in California from 2009 through 2013. Results show that the quality measures rating and health inspection rating, used as product descriptors, do not affect mean technical efficiency of nursing homes. These ratings, however, affect efficiency of particular nursing homes and hence alter the ranking of nursing homes based on efficiency scores. The staffing rating, used as a structural quality, is negatively associated with mean technical efficiency. The different dimensions of quality have different impacts on technical efficiency and that a higher staff /resident ratio does not necessarily lead to an improved care process. It implies that a reallocation of a part of resources from nursing staffs towards monitoring care process/procedure may lead to better resource utilization and higher care quality.

Included in

Economics Commons