The purpose of this study is to analyze the quality of service of the nursing homes contracted-out by city of Seoul based on categories of structure, process, and outcomes using Donabedian s analysis framework and to suggest the directions to improve the quality of life of residents in nursing homes. A survey was conducted among 7 nursing homes contracted-out by the city of Seoul. Also, financial analysis, focus group interview with workers and elderly residents in the nursing homes, and institutional visits were performed. Regarding structure of quality of service, there was little difference in staffing. Social service spendings were similarly minimal across nursing homes. Through the focus group interviews, physical condition of facilities, difficulties managing facilities due to increased labor costs, and necessity of recruiting more staff were suggested. In regard to aspects of the process, the participants of focus groups revealed their efforts for good care and difficulties in delivering service. With respect to the outcome of service, residents were satisfied with care overall, while expressing difficulties and inconvenience living in residential facility. Based on these results, the directions for improving structure and process of the service in nursing homes were discussed. Also, implications for enhancing of quality of life for elderly residents were suggested.