Evaluation of the Quality and Efficiency of Nursing Home Services in the United States Using the Nursing Home Star Rating System

Objective: Grounded in strategic management theory, this study examined the organizational characteristics and financial performance metrics associated with Centers for Medicare & Medicaid Services (CMS) star ratings across four domains: overall rating, staffing, quality measures, and health inspection. Methods: We analyzed 9,645 nursing homes using the 2023 CMS Medicare cost reports merged with the Nursing Home Care Compare data. Eight binary logistic regression models examined two outcomes per domain: facilities achieving high ratings (4-5 stars) versus lower ratings (1-3 stars), and facilities achieving the highest rating (5 stars) versus all others. Results: The bad debt ratio was consistently negatively associated with star ratings across all domains, with the strongest effects in staffing ratings (odds ratio (OR)=0.66 for 4-5 stars; OR=0.43 for 5 stars). Government facilities outperformed for-profit and non-profit facilities in staffing ratings. Nonprofit corporations showed higher odds of achieving high-quality measure ratings. Urban locations were positively associated with overall and health inspection ratings but negatively associated with quality measure ratings. Admissions per bed were positively associated with high ratings across all domains. Conclusion: Strategic management theory provides a framework for understanding variations in nursing home performance. Financial stability has emerged as a foundation for quality outcomes. Ownership structure shaped domain-specific performance patterns reflecting different strategic orientations. Healthcare systems seeking post-acute care partners should conduct domain-specific analyses rather than relying solely on composite scores. Policymakers should target interventions for financially distressed facilities and increase the regulatory scrutiny of ownership conversions.