Assisted Living Expansion and the Market for Nursing Home Care.

OBJECTIVE: To analyze the effect of market-level changes in assisted living supply on nursing home utilization and resident acuity. DATA SOURCES: Primary data on the supply of assisted living over time were collected from 13 states from 1993 through 2007 and merged with nursing home-level data from the Online Survey Certification and Reporting System and market-level information from the Area Resource File. STUDY DESIGN: Least squares regression specification incorporating market and time-fixed effects. PRINCIPAL FINDINGS: A 10 percent increase in assisted living capacity led to a 1.4 percent decline in private-pay nursing home occupancy and a 0.2-0.6 percent increase in patient acuity. CONCLUSIONS: Assisted living serves as a potential substitute for nursing home care for some healthier individuals with greater financial resources, suggesting implications for policy makers, providers, and consumers. (December 2012)