Drug Oversupply in Nursing Homes: An Empirical Evaluation of Administrative Data

A widely discussed shortcoming of long-term care in nursing homes for elderly is the inappropriate or suboptimal drug utilization, in particular the utilization of psychotropic drugs. This paper estimates the effect of institutionalization on the drug intake of frail elderly using administrative data from the largest sickness fund in Germany. Difference-in-differences propensity score matching techniques are used to compare drug prescriptions of frail elderly who entered a nursing home with those who remained in the out-patient care system. The findings suggest that nursing home inhabitants receive more doses of antipsychotics, antidepressants and analgesics. The potential oversupply goes along with estimated drug costs of about € 87 million per year.