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B. NURSING HOME SURVEYSUnder the current statutory system, the Health Care Financing Administration (HCFA) contracts with state agencies to inspect nursing homes for compliance.(27) Federal officials then randomly reinspect at least five percent of the homes to verify the state surveys.(28) NHRA produced dramatic effects.(29) By 1996, the regulations had cut the use of physical restraints on nursing home residents in half; incidences of dehydration also decreased by fifty percent.(30) Despite these promising results, subsequent reports found many disturbing conditions.(31) Approximately forty percent of all HCFA-certified facilities repeatedly violated federal standards over the past four surveys, including critical aspects of patient care.(32) "[A] quarter of the nation''s nursing homes failed even to assess each patient''s needs or develop individual care plans"(33) and, at the time, "government data show[ed] more than 2/3 of [the nation''s] nursing homes d[id] not fully comply with federal standards."(34) Explanations for the survey results ranged from the "federal inspection guidelines were less than rigorous and enforcement had little teeth ... [because] ... the only fines were minimal("35) claims that the inspection process was too subjective. The primary federal remedy, to deny payment for new admissions after three months of noncompliance,(36) apparently did not suffice to reform the quality of nursing home care.(37)

Table 3 shows the selected parameter estimates from the second-stage estimation. As discussed, the adjusted Wald tests of whether the coefficients of the [lambda]''s were zero were the tests for the endogeneity of having a regular doctor or site. The last column of Table 3 reports the result of the joint tests. The endogeneity of having a regular doctor or site was present for flu shots, blood pressure checkups, and cholesterol level checkups. No selection biases were found in the equations of pap smears or mammograms within the past two years.As described before, the effects of having a regular doctor ([I.sub.d]) and having a regular site ([I.sub.s]) conditional on the choice of a usual source of care are [gamma]1 + ([[alpha].sub.d][[lambda].sub.d] - [[alpha].sub.0][[lambda].sub.0]) and [gamma]2 + ([[alpha].sub.s][[lambda].sub.s] - [[alpha].sub.0][[lambda].sub.0]), respectively. These two effects are show in Table 4. Marginal effects of having a regular doctor and a regular site on the probabilities of receiving preventive services were reported. The [lambda]''s were calculated for each individual based on the predicted probabilities from the first-stage estimation. Because the [lambda]''s vary by individuals, the averages of the [lambda]''s were used in calculating the marginal effects.

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