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The determinants of care home closure

Allan, Stephen and Forder, Julien (2015) The determinants of care home closure. Health Economics, 24. pp. 132-145. ISSN 1057-9230

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Identification Number: 10.1002/hec.3149


This study investigates the causes of full closure of care homes in the English care home/nursing home market. We develop theoretical arguments about two causes for closure that are triggered by errors or external shocks: poor economic sustainability and regulatory action. Homes aiming to operate with lower quality in the market are argued for a number of reasons to be more susceptible to errors/shocks in setting quality, especially negative errors, leading to an empirical hypothesis that observed quality should negatively affect closure chance. In addition, given quality, homes facing relatively high levels of local competition should also have an increased chance of closure. We use a panel of care homes from 2008 and 2010 to examine factors affecting their closure status in subsequent years. We allow for the potential endogeneity of home quality and use multiple imputation to replace missing data. Results suggest that homes with comparatively higher quality and/or lower levels of competition have less chance of closure than other homes. We discuss that the results provide some support for the policy of regulators providing quality information to potential purchasers in the market.

Item Type: Article
Official URL:
Additional Information: © 2015 The Authors © CC-BY-NC-ND 4.0
Divisions: Personal Social Services Research Unit
Subjects: H Social Sciences > HN Social history and conditions. Social problems. Social reform
R Medicine > RA Public aspects of medicine > RA0421 Public health. Hygiene. Preventive Medicine
Date Deposited: 19 Mar 2015 13:50
Last Modified: 17 Jul 2024 21:24
Funders: Economics of Social and Health Care Research Unit (ESHCRU)

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