Objective  To investigate the psychometric properties and relationships of perceived service quality, perceived value and overall satisfaction for residents with respect to their long‐term care institutions. Design  The five‐point Likert scale questionnaire administered through facetoface interviews. Setting  Fourteen long‐term care institutions located in central and southern Taiwan stratified according to services and accommodation population. Participants  One hundred and eighty long‐term institutional care residents. Main outcome measures  Perceived service quality (the SERVPERF model), perceived value and overall satisfaction (models based on the literature on perceived value and satisfaction). Results  Student’s t‐test on institutional location shows a significant difference between overall satisfaction for central and southern institution long‐term care recipients. The correlation test revealed that the higher a resident’s level of education, the higher the scores for perceived value. The factor loading results of confirmation factor analysis show acceptable levels of reliability and index‐of‐model fits for perceived service, perceived value and overall satisfaction. In addition, the results suggest that an additional construct, a positive attitude (happiness of outlook) towards long‐term care institutions, is also an important factor in residents’ overall satisfaction. Conclusion  The primary goal of long‐term institutional care policy in Taiwan, as in other countries, is to provide residents with practical, cost‐effective but high‐quality care. On the basis of the results of in‐depth interviews with long‐term institutional care residents, this study suggests long‐term care institutions arrange more family visit days to increase the accessibility and interaction of family and residents and thereby increase the happiness of outlook of the residents.