The economic and racial makeup of the neighborhood where a nursing home is located plays a big role in how financially stressed it is, a new study confirms.

The research, published this week in Health Services Research, used data from the Centers for Medicare & Medicaid Services and the United States Census Bureau to gauge how a facility’s surrounding neighborhood affected its operating ratios and quality of care.

The study’s State University of New York-based authors found skilled nursing facilities in neighborhoods with a higher concentration of minorities were more likely to be fiscally stressed and have lower quality ratings than other homes.

The researchers’ models showed that increasing the composition of black residents within a neighborhood from 10% to 40% led to a $100,000 drop in total patient revenue. When the researchers modeled increasing the amount of a neighborhood’s residents living in poverty from 10% to 40%, a 1.7 point drop in quality ratings was predicted.

The research also found facilities that were more reliant on Medicaid funding to be under financial stress and provide lower quality care. Medicaid reimbursement rates are typically lower than Medicare or private payers.

The findings signal policymakers need to do more to boost the fiscal health of Medicaid-dependent providers in racial minority neighborhoods, researchers said.

“Although racial minorities may not be overtly barred from residing in certain nursing homes, institutional racism may remain through healthcare providers’ business decisions and individuals’ nursing home selection process based primarily on geographical proximity,” the study’s authors wrote.

Results are in Health Services Research.