OBJECTIVES: Skilled nursing facilities (SNFs) have a heavy reliance on labor, leading some to believe that productivity among SNFs will lag behind the rest of the economy. The goal of this paper is to assess productivity growth among SNFs during the last decade.

METHODS: Our analysis is based on a 100% sample of Medicare fee-for-service beneficiaries discharged to SNFs from hospitals over 2006 to 2014 with three conditions that frequently involve post-acute care: stroke, hip fracture, and lower extremity joint replacement (LEJR). For each condition at each SNF in each year, productivity was measured as the ratio of high-quality stays to costs. High quality stays were defined as stays where the patient returned to community 90 days after SNF admission. SNF productivity growth was estimated by regressing the logarithm of productivity on a trend variable for year of admission and patient demographic characteristics and comorbidities.

RESULTS: Our sample includes 1,076,066 patient stays at 14,394 SNFs with a diagnosis of LEJR, 315,546 patient stays at 14,154 SNFs with a diagnosis of stroke, and 739,608 patient stays at 14,588 SNFs with a diagnosis of hip fracture. The average annual productivity growth rates are +1.1% for LEJR, +2.2% for stroke, and +2.0% for hip fracture, respectively. Alternative definitions of “high-quality” SNF stays yield similar results. Regressions on year dummies show that the productivity first decreased and then increased, reaching a low in 2011. Over the study period, the rate of high-quality SNF stays continued to rise, but was dominated by increasing costs at first. Costs then started to decrease, resulting in overall productivity growth.

CONCLUSIONS: In the U.S. in recent years, there has been substantial productivity growth among SNFs in treating common post-acute-care-intensive conditions.