Efficiency Incentives in the Nursing Home Sector: Lessons from Implementing the new Quality Framework in the Netherlands

In many markets there is some form of regulation; and when new policy measures are introduced into a particular sector, the question of how to structure an adequate regulatory process arises. This paper contributes to the literature by describing the approach taken in the nursing home sector in the Netherlands, explaining all the steps needed for implementation and how regulatory challenges were addressed. These challenges involved making methodological choices and the integration of elements (incentives, quality, cost-efficiency, data validation, organizational commitment) into a consistent and credible regulatory framework. Drawing lessons for other sectors and countries, we particularly emphasize the usefulness of Data Envelopment Analysis as a flexible and adaptable regulatory tool for both learning and incentive provision. However, the scope and specification of the model must be consistent with costaccounting practices and quality definitions in order for DEA to be implemented effectively.