W.: Case mix, quality, and cost relationships in Colorado nursing homes

The analyses reported in this article assessed the cost, case mix, and quality interrelationships among Colorado nursing homes. A unique set of patient-level data was collected specifically to measure case mix and quality. Case mix was found to be strongly asso-ciated with cost, accounting for up to 45 percent of the variation in cost per patient day. The relationship between quality and cost was weaker; quality variables accounted for only about 10 percent of the cost per day variation. Case mix was also associated with sev-eral facility characteristics found to be significant in other cost studies, suggesting that such facility charac-teristics serve as partial proxy measures for case mix. The cost-case mix relationships appear to be strong enough to justify incorporating case mix directly in nursing home reimbursement systems. In contrast, the weaker cost-quality association implies that it may not (yet) be appropriate to incorporate quality directly in reimbursement