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Rating the Five Star Ratings

Rating the Five Star Ratings

The Kaiser Foundation published an issue brief in May that presents an analysis of the February 2015 update of the Nursing Home Compare database: Reading the Stars: Nursing Home Quality Star Ratings, Nationally and by State.

The brief extends to identifying correlations between nursing homes and reported ratings – factoring not-for-profit vs. for profit status; number of licensed nursing home beds; and state locations. The brief effectively amplifies the complexities and select shortcomings of the Five Star Rating System – as well as the inference that there remains a high degree of subjectivity in the system. However, the analysis excludes two fundamental criteria that undoubtedly breed material variability in ratings. Namely, the attributes of financial performance and property features that are essential considerations in proving correlations among providers.
A conclusive correlation between not-for-profit and for-profit providers cannot be made absent a financial analysis of differentiations. This extends to elements of financial performance as well as capital structure. Factors associated with revenue realization, expense management, profitability and capital resources are highly variable and influential to the rating criteria. Financial metrics introduced in a transparent and uniform manner would prove insightful in validating or otherwise interpreting correlations.

As to property features, similar variability exists among providers beyond bed size alone. Chief among these are the age, condition and functional design of the operating environment. Operating efficiencies, and by extension financial performance, drive outcomes and prove influential as to impacting rating criteria. These are important disparities to consider. Prevailing initiatives to reposition, revitalize or re-invent new models of nursing home care are clearly responsive to the predominately aged inventory of nursing homes. This trend amplifies growing recognition that the traditional “geriatric” nursing home model is not sustainable – while new models the likes of The Green House Project and Small Homes emerge. These new models are clearly conceived to support and promote resident and staff satisfaction above all. This in turn advances all facets of performance outcomes – the fundamental drivers for any rating system.

As we consider the three domains of the existing Five Star Rating System (Staffing Measures; State Health Inspections; and Quality Measures), advancing efforts to develop a more reliable and equitable process – and to draw valid correlations from reported ratings – the playing field needs to be leveled. Truly reliable ratings are predicated on differentiating between the drivers of the measurement criteria – financial and operational factors alike.