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This research brief describes work documented in Paul J. Gertler, "Subsidies, Quality, and the Regulation of Nursing Homes," Journal of Public Economics, Vol. 38, 1989, pp. 33-52, and in Paul J. Gertler and Donald M. Waldman, "Quality-Adjusted Cost Functions and Policy Evaluation in the Nursing Home Industry," Journal of Political Economy, Vol. 100, No. 6, 1992, pp. 1232-1256.

Excerpt: The long-term convalescent health-care industry in the United States faces three well-documented problems: (1) many indigent patients cannot gain access to nursing homes; (2) the quality of nursing home care is often suspect; and (3) the cost of this care is considerable and continues to increase at a worrisome pace.

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