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9 September 2022

Do higher accommodation prices reflect better care quality in residential aged care facilities?

Anne Penneau , Institute for Research and Information in Health Economics (IRDES) , France

Zeynep Or
Institute for Research and Information in Health Economics (IRDES)


Context: In France one in ten people older than 75 live in Residential Aged Care facilities (RACF) which provide support for daily living. The costs of medical and social care services in RACF are funded by the public health insurance and local authorities, based on their case-mix using the same tariffs across all public and private facilities, while the cost of accommodation is paid by the resident. Elderly people are free to choose a facility based on the accommodation price and the perceived quality. However, accommodation prices vary significantly in a competitive market while there is no public information on the quality of RACFs. The objective of this article is to estimate the relationship between the price paid by residents and care quality in RACF.

Method: We use a unique database matching a representative sample of patients in RACF, with claims data from the health insurance database from 2014 to 2019. We match this with a survey of RACFs to have their profile, funds, and accommodation prices, and to calculate care quality indexes (staffing, process, outcome). We specify a linear regression to estimate the link between accommodation prices and care quality scores, controlling for the level of public funding perceived by the facility, the ownership status and others confounding factors (case-mix, accommodation quality, prices of production factors, local competition, etc.).

Results: All else being equal, higher staffing and process quality scores are associated with higher accommodation prices. In contrast, higher care outcomes, measured by the frequency of hospital transfers and emergency admissions by residents is associated with lower prices. Globally, care quality scores explain a small portion of the variation observed in prices, which are mostly determined by the prices of production factors (real estate), ownership status (for profit or not), and competition in the local area of the facility.

Conclusion: This is the first study in France looking into the quality of care provided in RACFs and accommodation prices. Our results confirm that there is a strong asymmetry of information in residential care markets, and it is necessary to improve the measurement of and communication on care quality in RACF, and regulate accommodations prices with more transparency in France. The public funding model should integrate care quality objectives and clarify the conditions of a satisfactory level of care, to reduce repeated hospitalisations and to limit the cost of accommodation for the residents.


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