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Date
Jun
06
2006

The Effects of Competition on Community-Based Nursing Wages

Presenter:

Dara Zarnett

Authors:

Dara Zarnett, Audrey Laporte, Eric Nauenberg, Diane Doran, Peter Coyte

Chair: TBA; Discussant: TBA Tue June 6, 2006 10:45-12:15 Room 225

In 1997, Ontario’s Community Care Access Centres (CCACs) were given the authority to purchase home care services from for-profit and not-for-profit providers through a competitive bidding process. The purpose of this reform was to encourage competition between home care providers, with the twin objectives of lowering costs and increasing service quality. This paper investigates how competition amongst home care service providers in Ontario affected the gross nursing wages of private home care providers between 1995 and 2000. Regression analyses were performed to ascertain the relationship between measures of competition (Hirschman-Herfindahl Index (HHI), Participant Index (PI)), profit status of the provider agencies, and gross nursing wages for Registered Nurses (RN) and Registered Practical Nurses (RPN), while holding other factors constant. Using the HHI and PI as measurements of competition, RN gross wages significantly decreased by 11.7% and 0.9% respectively. The PI measured a significant decline in RPN gross wages of 1.5% in an increasingly competitive market. Furthermore, for-profits paid lower gross RN wages, by 6.8%, compared to not-for-provider agencies. It was also observed that there the distribution between for-profit and not-for-profit agencies has changed dramatically, and there have been large increases in the number and volume of for-profit service contracts. This implies that the for-profit agencies are winning more contracts and crowding out the not-for-profits. These findings correspond with previous literature which reports that competition can lead to lower staff wages and differential payments by provider types. These findings have the potential to lead to a destabilized labour market, which can negatively impact quality of care.

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