Table 4.

The Estimated Effects of Nursing Home Quality on Cost

Quality Indicator	Improvement in Quality	Resulting Change in Annual Total Cost ($)	Change as % of Annual Total Cost
Care-related personnel*	Increase by 1 FTE staff per resident	Increase by $299	+0.009%
Catheterization rate	Decrease by 1%	Increase by $38,604	+1.1%
Drug error rate	Decrease by 1%	Increase by $65,103	+1.9%
Group organization**	None → One Type or One Type → Both	Increase by $131,439	+3.8%
Regulatory deficiencies	Decrease by 1 citation	Increase by $23,111	+0.7%

^*Care-related personnel includes RNs, LPNs, nurse aides, pharmacists, and medication aides.

^**“Group organization” was coded as a category variable: it equals 0 if there is no group organization activities in a facility; it equals 1 if there is one type of activity (resident or familygroup) in a facility; and it equals 2 if there are both resident and family groups in a facility.

Note: The above estimates were calculated using the mean values (from Table 2) and coefficients (from Table 3). Therefore, the estimated effects of quality on cost apply to an average nursing home with a total of 55,853 patient days annually in 1994.