Nursing home financial performance: The role of ownership and chain affiliation

Academic Article

Abstract

  • Using longitudinal data for a national sample of nursing homes for the period of 1999- 2004, this study examined the effects of ownership (for-profit status) and chain affiliation on financial performance. Data included the Medicare Cost Reports, the On-line Survey Certification of Automated Records (OSCAR), and the Area Resource File (ARF). The dependent variable consisted of financial performance tier based on operating and total margins: low (bottom 10%), medium (middle 80%), and high (top 10%). Independent variables included four ownership/chain affiliation combinations: for-profit chain, for-profit independent, not-for-profit chain, not-for-profit independent. Control variables consisted of size, payer mix, occupancy rate, case mix, Herfindahl Index, excess capacity, hospital-based nursing home beds, metropolitan area, percent of population over 65, and per capita income. Ordered logit regression results show that for-profit nursing homes had better operating margins than not-for-profit homes, but the latter outperformed for-profit homes among independents with respect to total margins. Independent (non-chain) nursing homes outperformed chain affiliated homes regardless of financial performance measure or ownership type.
  • Author List

  • Weech-Maldonado R; Laberge A; Pradhan R; Johnson CE; Yang Z; Hyer K