The relationship between advertising, price, and nursing home quality.
BACKGROUND
Theoretically, nursing homes should engage in advertising for the following two reasons: (a) to improve awareness of the services offered in a particular market and (b) to signal high-quality services. In this study, we build upon results from prior studies of nursing home advertising activity, market competition, and quality.


OBJECTIVE
The purpose of this study was to examine the association between advertising expenses, price, and quality. We focused on answering the question: Do nursing homes use advertising and price to signal superior quality?


METHODS
The Texas Nursing Facilities Medicaid Cost Report, the Texas Quality Reporting System, and the Area Resource File were merged for the year 2003. We used three alternative measures of quality to improve the robustness of this exploratory analysis. Quality measures were examined using Bonferroni correlation coefficient analysis. Associations between advertising expenses and quality were evaluated using three regression models predicting quality. We also examined the association of the price of a private bed per day with quality.


RESULTS
Advertising expenses were not associated with better nursing home quality as measured by three quality scales. The average price customers pay for one private bed per day was associated with better quality only in one of the three quality regression models. The price of nursing home care might be a better indicator of quality and necessary to increase as quality of care is improved in the nursing homes sector. Because more advertising expenditures are not necessarily associated with better quality, consumers could be mislead by advertisements and choose poor quality nursing homes.


CONCLUSIONS
Nursing home administrators should focus on customer relationship management tools instead of expensive advertising. Relationship management tools are proven marketing techniques for the health services sector, usually less expensive than advertising, and help with staff retention and quality outcomes.
Kash
Bita A
BA
Department of Health Policy and Management, School of Rural Public Health, Texas A&M Health Science Center, College Station, USA. bakash@srph.tamhsc.edu
Miller
Thomas R
TR
D000329:Advertising / Q000191:economics*; D019992:Databases as Topic; D009735:Nursing Homes / Q000191:economics / Q000592:standards*; D011787:Quality of Health Care / Q000592:standards*; D012044:Regression Analysis; D013781:Texas