The article focuses on nursing homes costs and quality of care outcomes. Consumers are demanding mechanisms that will allow them to evaluate the quality of care provided in nursing homes. Policymakers, who are responsible for oversight of the public funding of more than 70% of patient days in nursing home care and approximately two-thirds of expenditures on nursing home care, want assurance that monies are contributing to better quality care. A number of studies attempted to assess the factors contributing to variations in the costs of care in nursing homes. An underlying assumption in these studies was the existence of a direct relationship between costs and the efficient provision of services appropriate to patient needs.