Do Report Cards Predict Future Quality? The Case of Skilled Nursing Facilities

Report cards are intended to improve consumer decision-making and foster a market for quality. However, inadequate risk adjustment of report card measures often biases comparisons across firms. We test whether skilled nursing facility (SNF) star ratings causally predict quality outcomes. We exploit variation over time in the distance from a patient’s residential ZIP code to SNFs with different ratings to estimate the causal effect of admission to a higher-rated SNF on health care outcomes, including mortality. We found that patients who go to higher-rated SNFs achieved better outcomes, supporting the validity of the SNF report card ratings.