title: A quality-adjusted cost function in a regulated industry: the case of Dutch nursing homes.
abstract: The primary objective of this paper is to examine the cost structure of the Dutch nursing home industry, using econometric techniques. In this paper we present a model that combines economic behaviour and quality of services measured by a latent variable. We propose a simple method for identifying and estimating cost functions in the presence of endogenous, unobserved quality. Estimating this quality-adjusted cost function and the corresponding cost share equations indicates that quality is negatively related to the input prices of nurses and other personnel, indicating that nursing homes have a preference for labour. We also show that the quality-adjusted model is superior to a model with exogenous quality.
authors.affiliation: Social and Cultural Planning Office, The Hague, The Netherlands. jo@scp.nl
authors.forename: J L
authors.initials: JL
authors.lastname: Blank
authors.forename: E
authors.initials: E
authors.lastname: Eggink
mesh_terms: D000368:Aged; D003361:Cost Allocation; D004465:Economic Competition; D017598:Efficiency, Organizational; D017048:Health Care Costs / Q000706:statistics & numerical data*; D006302:Health Services Research; D006801:Humans; D017059:Models, Econometric; D009426:Netherlands; D009735:Nursing Homes / Q000191:economics* / Q000592:standards*; D019984:Quality Indicators, Health Care / Q000191:economics*