The impact of quality on cost in the provision of long-term care.

Regulatory and reimbursement policies in the health care industry have generally been developed on the assumption that a trade-off exists between quality enhancement and cost control. In this study of 494 proprietary, nonprofit, and government nursing home facilities in New York State, I examined the relationship between quality and costs while controlling for facility characteristics and resident characteristics. I found that although the capital-intensive aspects of patient care quality make a significant impact on costs, the labor-intensive aspects of patient care quality do not. I discuss the policy implications of these findings.