Title | The principal-agent problem and owner-managers: An instrumental variables application to nursing home quality |
Publication Type | Journal Article |
Year of Publication | 2018 |
Authors | Huang S.S, Bowblis J.R |
Journal | Health Econ |
Volume | 27 |
Issue | 11 |
Pagination | 1653-1669 |
Date Published | Nov |
ISBN Number | 1057-9230 |
Accession Number | 29968263 |
Keywords | differential distance, instrumental variables, managerial ownership, nursing home, organizational structure, principal-agent problem, quality |
Abstract | The literature on provider ownership has primarily focused broadly on for-profits compared with nonprofits and chains versus nonchains. However, the understanding of more nuanced ownership arrangements within individual facilities is limited. Utilizing the principal-agent and managerial control frameworks, we study the role of managerial ownership and its relationship to quality among for-profit nursing homes (NHs). We identify NH administrators with more than 5% ownership (owner-manager) from Ohio Medicaid Cost Reports (2005-2010) and link these data to long-stay resident records in the Minimum Data Set. Using differential distance to the nearest NHs with a salaried manager relative to an owner-manager, we address the differential selection into these two types of NHs. After instrumenting for admissions to owner-managed NHs, quality among long-stay residents at owner-managed NHs is generally better than NHs with salaried managers. We find suggestive evidence that the magnitudes of quality difference are larger when the principal-agent problem is likely more pronounced, such as when NHs that are part of a multifacility chain and located in more concentrated markets. |
DOI | 10.1002/hec.3792 |
Link | |
Short Title | Health economics |
Alternate Journal | Health economics |