Policies to Improve Quality in Virginia’s Nursing Homes: The Role of Local Labor Markets

Nursing home quality of care has long been a policy concern. With invested interest from Medicaid as the primary payer for long-term care services, policy is continually being introduced at the state and local level to improve this quality of care. In Virginia, a Value-Based Purchasing (VBP) policy has been implemented to incentivize nursing facilities to perform well on six quality of care metrics. Previous research suggests VBP implementation and performance varies from facility to facility. How do local labor market conditions affect nursing home quality of care? In an attempt to fill the gap in the literature examining the impact of local economic conditions on nursing home quality of care, I used a multivariate regression analysis to examine the relationship between unemployment, employment, and turnover rates with nursing home quality measures. While the regression analysis yielded little correlation between local labor market conditions and nursing home quality of care, the share of days paid for by Medicaid correlated with several measures of quality. As Medicaid reimbursements are less than private insurance or out-of-pocket payments, a nursing facility with a high share of days paid for by Medicaid is likely a lower-funded facility. Funding influences quality of care in nursing homes. This has policy implications for Value-Based Purchasing programs