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Abstract
A significant problem with examining efficiency and performance in the nursing home industry is an implicit assumption of quality homogeneity. Cost data are typically regressed against output, measured in bed days, without explicit recognition of the effects of quality on cost structures. Regulatory agencies at both the federal and state levels collect, process and provide proxy quality measures that can be incorporated into nursing home cost-efficiency analyses. Available sources for quality information are presented along with a discussion of the potential problems in measuring quality in a nursing home setting. Specific suggestions are made for dealing with inherent weaknesses in quality data.