Health board inspections of the Leas Cross nursing home were "somewhat narrowly focused" and had an undue emphasis on its physical environment and the qualifications of its staff, according to the report.
It recommends the size of nursing homes currently being registered should be reviewed.
"Leas Cross is registered for 111 places. The thrust of national policy is that the elderly should be cared for in smaller community units. A maximum of 50 beds might be considered an appropriate ceiling," it said.
Leas Cross, it added, was inspected on October 6th, 2000, by the Northern Area Health Board (NAHB). This was just four days before Peter McKenna (60) was admitted to the home on foot of a High Court order, as he was a ward of court.
The Swords nursing home, it said, was approved at the time for 38 patients.
"No huge disparity had been detected by the NAHB in the number of complaints received regarding Leas Cross compared with other nursing homes in the area," the report said.
"The inspections focused to a large extent on the physical infrastructure of the nursing home and on ensuring that nursing staff were properly registered.
"While the inspection reports have generally recorded that residents appeared well cared for, it is not clear what criteria were used in reaching this conclusion at the time of each inspection," it added.
The author of the report, Martin Hynes, former head of the blood bank, said it "would seem timely for the NAHB to carry out a complete review of its regulatory role in regard to nursing homes".
This should focus, it said, on issues such as the criteria assessed during inspections and the experience and training necessary for inspectors.
"Inspections should move away from the undue emphasis currently being placed on examining the physical facilities and the general environment of the nursing home. Instead the inspections should focus much more on the quality of care and the factors which underpin this," the report said.
"Inspections should move on from looking for nurses' Pin numbers to reviewing the nurses' experience and understanding of meeting the care needs of the elderly and their capacity to lead untrained care staff in the care process."
Inspectors, he recommended, should look at the dignity afforded to residents, the frequency with which bed linen was changed, the opportunities residents had to receive visitors in private, they should speak to residents themselves, and should look at policies and procedures in place for infection control.
There should also be a review of the manner in which complaints about nursing homes are dealt with, the report said.
Leas Cross was forced to close after the Health Service Executive (HSE) withdrew patients from it in the aftermath of conditions being secretly filmed and broadcast by Prime Time.
The HSE says it has now reviewed nursing home inspection processes and has agreed a national standardised inspection process which will be implemented by all inspection teams throughout the country. This includes unannounced inspections.
Legislation to give powers to an inspectorate independent of the HSE to inspect all homes, both public and private, is also expected to be enacted next year.