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.