Racial Differences in Nursing Home Value Added

Liran Einav; Amy Finkelstein; Neale Mahoney; James C. Okun

doi:10.3386/w34324

Racial Differences in Nursing Home Value Added

Liran Einav, Amy Finkelstein, Neale Mahoney & James C. Okun

Working Paper 34324

DOI 10.3386/w34324

Issue Date October 2025

We use detailed data on the evolution of health for about 0.8 million Black and 5.4 million white nursing home patients covered by Medicare between 2011 and 2019 to estimate race-specific value-added measures for more than 8,000 nursing homes in the United States. We estimate that the average nursing home value-added experienced by Black patients is about 30% lower than that received by white patients. Most of this gap reflects differences in value-added experienced by similar Black and white patients within the same nursing home, rather than differences in value-added across the nursing homes they go to.

We thank Carine You for superb research assistance; seminar participants at the NBER racial and ethnic health disparities conference, the American Economic Association annual meeting, UC Irvine, and the DC health economics seminar for helpful comments; and the National Institute on Aging (Finkelstein R01-AG032449) for financial support. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

Liran Einav
I would like to disclose that I was an adviser to Nuna Health, a data analytics startup company, which specializes in analytics of health insurance claims. I am not being paid by them, but have received equity (nominal value is less than $1,000 the market value is hard to assess).
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Liran Einav, Amy Finkelstein, Neale Mahoney, and James C. Okun, "Racial Differences in Nursing Home Value Added," NBER Working Paper 34324 (2025), https://doi.org/10.3386/w34324.

Racial Differences in Nursing Home Value Added

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