Determinants of performance failure in the nursing home industry

https://doi.org/10.1016/j.socscimed.2008.12.014Get rights and content

Abstract

This study investigates the determinants of performance failure in U.S. nursing homes. The sample consisted of 91,168 surveys from 10,901 facilities included in the Online Survey Certification and Reporting system from 1996 to 2005. Failed performance was defined as termination from the Medicare and Medicaid programs. Determinants of performance failure were identified as core structural change (ownership change), peripheral change (related diversification), prior financial and quality of care performance, size and environmental shock (Medicaid case mix reimbursement and prospective payment system introduction). Additional control variables that could contribute to the likelihood of performance failure were included in a cross-sectional time series generalized estimating equation logistic regression model. Our results support the contention, derived from structural inertia theory, that where in an organization's structure change occurs determines whether it is adaptive or disruptive. In addition, while poor prior financial and quality performance and the introduction of case mix reimbursement increases the risk of failure, larger size is protective, decreasing the likelihood of performance failure.

Section snippets

Change and organizational failure

According to structural inertia theory (Hannan and Freeman, 1984, Hannan and Freeman, 1989) where in the organization change occurs determines whether it is disruptive, contributing to performance failure or adaptive, contributing to reliable and accountable performance. Changes in core structure are often disruptive and destabilizing, and as a result, inertia, resistance to change, is thought to be strongest in core structure (Hannan & Freeman, 1989). The underlying logic of this argument is

Data and sample

The primary data for this study come from the longitudinal Online Survey Certification and Reporting (OSCAR) system. An administrative database maintained by the Centers for Medicare and Medicaid Services (CMS), OSCAR includes organizational characteristics for all Medicare/Medicaid certified nursing homes in the U.S. and aggregate resident data routinely collected as part of the licensure and certification process. CMS contracts with each state to conduct onsite inspections, which occur, on

Results

Table 1 presents summary statistics for the variables included in our model, aggregated from OSCAR data (1996–2005). 73.7% of sample facilities were for-profit and 56.1% were chain-affiliated. Average Medicare census was 10.8%. 62.8% were located in states that had introduced Medicaid case mix reimbursement during the study time period.

Table 2 presents the logistic regression model results of the determinants of performance failure. As predicted by hypothesis 1, a facility experiencing one

Discussion

Our results support the contention, derived from structural inertia theory, that where in the organization change occurs determines whether it is disruptive and thus contributes to performance failure or adaptive, protecting against failure. Our results indicate that change of ownership, particularly when it occurred with greater frequency over the study period, increases the likelihood of termination from public program participation. This suggests that major reorganization required by change

References (55)

  • B.D. Gifford et al.

    Modeling hospital closure relative to organizational theory: the applicability of ecology theory's environmental determinism and adaptation perspectives

    Social Science & Medicine

    (1988)
  • J.A. Alexander et al.

    Determinants of profound organizational change: choice of conversion or closure among rural hospitals

    Journal of Health and Social Behavior

    (1996)
  • T.L. Amburgey et al.

    Resetting the clock: the dynamics of organizational change and failure

    Administrative Science Quarterly

    (1993)
  • J. Angelelli et al.

    Oversight of nursing homes: pruning the tree or just spotting bad apples?

    Gerontologist

    (2003)
  • W.P. Barnett et al.

    Too much of a good thing? Product proliferation and organizational failure

    Organization Science

    (2001)
  • W.P. Barnett et al.

    The red queen in organizational evolution

    Strategic Management Journal

    (1996)
  • BDO Seidman LLP

    A report on the shortfalls in Medicaid funding for nursing home care

    (2001)
  • C. Bishop

    Where are the missing elders?: the decline in nursing home use 1985 and 1995

    Health Affairs

    (1999)
  • W. Boeker et al.

    Competition in a multi-market environment: the case of market exit

    Organization Science

    (1997)
  • G.R. Carroll

    Organizational ecology

    Annual Review of Sociology

    (1984)
  • P. Clarkson et al.

    Public funding for residential and nursing home care: projection of the potential impact of proposals to change the residential allowance in services for older people

    International Journal of Geriatric Psychiatry

    (2003)
  • K. Dalton et al.

    Market entry and exit in long term care: 1985–2000

    Health Care Financing Review

    (2002)
  • R. Darton et al.

    The cost implications of the changing population and characteristics of care homes

    International Journal of Geriatric Psychiatry

    (2003)
  • J. Davis et al.

    Strategy, structure and performance in nursing facilities

    Advances in Health Care Management

    (2001)
  • V. Galloro

    Bankrupt and without a plan

    Modern Healthcare

    (2000)
  • D. Grabowski

    The economic implications of case-mix Medicaid reimbursement or nursing home care

    Inquiry

    (2002)
  • D.C. Grabowski et al.

    Medicaid payment and risk-adjusted nursing home quality measures

    Health Affairs (Millwood)

    (2004)
  • T.S. Gruca et al.

    Regulatory change, constraints on adaptation and organizational failure: an empirical analysis of acute care hospitals

    Strategic Management Journal

    (1994)
  • A. Gruneir et al.

    Long-term care market competition and nursing home dementia special care units

    Medical Care

    (2007)
  • M.T. Hannan et al.

    Structural inertia and organizational change

    American Sociological Review

    (1984)
  • M.T. Hannan et al.

    Organizational ecology

    (1989)
  • H.A. Haveman et al.

    Organization environments in flux: the impact of regulatory punctuations on organizational domains, CEO succession and performance

    Organization Science

    (2001)
  • H.H. Haveman

    Between a rock and a hard place: organizational change and performance under conditions of fundamental environmental transformation

    Administrative Science Quarterly

    (1992)
  • Health Care Financing Administration

    Medicare program: prospective payment system and consolidated billing for skilled nursing facilities (final rule)

    Federal Register (Rules and Regulations)

    (May 12 1998)
  • J. Kim

    Making sense of organizational failure: the marconi debacle

    Prometheus

    (2005)
  • M. Kitchener et al.

    Smoke without fire: nursing facility closures in California, 1997–2001

    Inquiry

    (2004)
  • M. Kitchener et al.

    Chain reaction: an exploratory study of nursing home bankruptcy in California

    Journal of Aging and Social Policy

    (2005)
  • Cited by (38)

    • Medicaid Long-term Care Policies and Rates of Nursing Home Successful Discharge to Community

      2020, Journal of the American Medical Directors Association
      Citation Excerpt :

      We added annual fixed effects to control for unobserved fixed annual characteristics. GEE models have been widely used to examine policy effects providing marginal estimates of covariate effects on outcomes.9,30 Because of the non-linear association of Medicaid reimbursement rates and successful discharge, reimbursement rates were categorized into 4 quartiles.

    • The Relationship Between Quality of Care, Physical Therapy, and Occupational Therapy Staffing Levels in Nursing Homes in 4 Years’ Follow-up

      2019, Journal of the American Medical Directors Association
      Citation Excerpt :

      When aiming to reduce fall risk, PT/OT staff tend to be used in multidisciplinary or multicomponent approaches in collaboration with physicians and members of the nursing team.1,2,16 When aiming to improve functioning and mobility, PT/OT staff directly provide behavioral/exercise therapy interventions.31–33 These staffing disciplines may have more of a direct effect on the ADL measure through explicitly offering therapy services and interventions.

    • The Effect of Residential Aged Care Size, Ownership Model, and Multichain Affiliation on Resident Comfort and Symptom Management at the End of Life

      2019, Journal of Pain and Symptom Management
      Citation Excerpt :

      Furthermore, quality-of-care problems appear to be more pronounced in for-profit facilities owned by a corporate chain.10,11 Structural factors of interest reported in the international research literature include the size of facilities, the ownership model (for-profit, nonprofit), and whether the organization providing aged care services are affiliated with a chain.12–14 Research has indicated that larger facilities often have lower staff to resident ratios and more often focus on profit maximization rather than the quality of outcomes for residents.15

    • How health navigators legitimize the Affordable Care Act to the uninsured poor

      2016, Social Science and Medicine
      Citation Excerpt :

      Despite limits to generalizability, this study highlights an important and understudied repertoire that occupations can use to build legitimacy: distancing from occupations clients perceive as illegitimate. Frontline health workers like nursing assistants (Zinn et al., 2009), HIV/aids outreach staff (Coyle et al., 1998), and community health workers (Perry et al., 2014) face similar challenges in building the legitimacy necessary to convince clients to adhere to prescribed medications, engage in safe sex practices, or enroll in health programs. Health outreach efforts typically attempt to build legitimacy by hiring health workers directly from the disadvantaged communities being served (Shaya and Gbarayor, 2006).

    • Hospital-skilled nursing facility referral linkage reduces readmission rates among Medicare patients receiving major surgery

      2016, Surgery (United States)
      Citation Excerpt :

      Patient characteristics included age, gender, race, comorbidity scores (calculated using Elixhauser8 and Deyo-modified Charlson9 scales), hospital duration of stay, and intensive care unit use. SNF attributes from the OSCAR data included the full-time equivalents of different types of nursing staff (registered nurses [RNs], licensed practical nurses [LPNs], and certified nursing assistants [CNAs]),10-13 the proportion of Medicaid paid residents,14-17 the weighted deficiency score based on state's inspection of the SNF,13,18,19 occupancy rate, chain membership, corporate ownership (for profit or not), and the presence of any physician extenders (eg, nurse practitioners, physician assistants).20 Additionally, we included several facility level characteristics from the minimum data set (available at www.ltcfocus.org), including the proportion of black residents, the proportion of residents enrolled in managed care and the Resource Utilization Groups III case mix index.

    • Contextual determinants of US nursing home racial/ethnic diversity

      2014, Social Science and Medicine
      Citation Excerpt :

      The index measures the difference between the degree of diversity of a nursing home and the degree of diversity of the county where the nursing home is located. The county diversity is used as the metric of comparison, since the county has been broadly used in the literature as a proxy for the nursing home market (Mor et al., 2004; Zinn et al., 2009). Massey and Denton (1988) suggested that segregation consists of five key dimensions.

    View all citing articles on Scopus

    This research was supported in part by National Institute for Aging grants (AG#11624 and AG023622) and a Robert Wood Johnson Foundation Health Policy Investigator Award.

    View full text