The Determinants of Nursing Home Exit and the Price Elasticity of Institutional Care: Evidence from Micro-level Data

Satoshi Shimizutani and Haruko Noguchi

ESRI Discussion paper series from Economic and Social Research Institute (ESRI)

Abstract: This paper uses a unique census data on Japanese nursing homes to evaluate the determinants of nursing home exit and the price elasticity of the institutional care. We take two approaches to address these by making use of micro-level data from Kaigo Service Shisetsu Zigyousho Chousa (Survey on Care Service Providers) conducted by the Ministry of Health, Labor and Welfare in September 2000. First, we use probit estimates to examine the choice decision to exit a nursing facility to home by making use of clients who left their facilities in September 2000. Our results show that one percentage point increase in self-burden to use institutional care will lead to an increase in probability to return to home by 0.04 percentage points for long-term care welfare facilities, 3.7 percentage points for long-term care health facilities, respectively. On the contrary, the price elasticity with respect to exit to re-hospitalization is minus 3.3 percentage points (health care facility) and minus 1.9 percentage points (medical care facility). These results suggest that at-home care is a substitute for institutional care but care services in medical institution are complement for services at nursing homes. Especially, the elderly with relatively lower care levels and thus higher self-burden to use long-term care tends to be re-hospitalized if they do not have any family members to live together. Therefore, policies to address deduction of the "socially hospitalized" elderly should focus on these types of the elderly. Then, we apply a duration model to the sample that consists of all clients who stayed in or left from a nursing home in September 2000 in order to evaluate the price effect on how long a client stays in a nursing home. Our results report that price elasticity with respect to duration staying in nursing homes is 1.7 percentage points (95% confidence interval: 0.4-3.0 percentage points) for long-term care welfare facilities; and 1.8 percentage points (95% confidence interval: 0.0-3.8 percentage points) for health facilities. Our findings demonstrate that price policy might be useful for allocating clients from institutional care to at-home care, though the effect is relatively small for long-term care welfare facilities compared to health facilities.

Pages: 27 pages
Date: 2002-12
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Citations: View citations in EconPapers (2)

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