Structure, environment and strategic outcome: a study of Pennsylvania nursing homes.

This study applies Porter's model of competitive advantage to the nursing home industry. Discriminant analysis is used to identify organizational and environmental characteristics associated with nursing homes which have demonstrated valued strategic outcomes, and to distinguish the more successful nursing homes from their rivals. The results of the discriminant analysis suggest that nursing homes with superior payer mix outcomes are distinguishable from their less successful rivals in areas associated with a focused generic strategy. The study suggests that nursing homes which are better staffed, of smaller size and lower price are more likely to achieve high levels of self-pay utilization. Independent living units, continuing care retirement communities in particular, are likely to act synergistically with nursing home organizational characteristics to enhance competitive advantage by linking the value chain of the nursing home to that of retirement housing. Nursing homes with higher proportions of Medicare were found to provide a unique product when compared to their rivals. Profit status does not discriminate better self-pay strategic utilization, but for-profit facilities are more likely to pursue a Medicare strategy. Concern was raised that, as nursing homes become more strategically oriented, Medicaid access may become more problematic.

The impact of intra-DRG severity of illness on hospital profitability: implications for payment reform.

We examined the relationship between variations in intra-DRG severity of illness classifications and hospital profitability. Unlike in previous studies, we created a direct hospital-level measure of severity, formed from MedisGroup severity scores. We estimated separate regression equations for total margin, operating margin, net revenue per admission, and expense per admission. We examined data for 201 Pennsylvania hospitals and found that hospital profits were inversely related to the severity of illness index. Expense per admission was positively related to severity; however the relationship between severity and net revenue per admission was not significant. The results suggest that hospitals with a more severe case mix may not recover the full costs of providing services. Thus payment reform should include adjustments for severity of illness.

Variations in the outcomes of care provided in Pennsylvania nursing homes. Facility and environmental correlates.

This research study utilizes indicators from federal and state surveys to evaluate variation in outcomes in 438 Medicare certified skilled nursing care facilities in Pennsylvania. First, a standardization function adjusting for patient characteristics known to influence outcomes was developed and estimated. The relationships between organizational and environmental characteristics and the chosen outcome indicators (i.e., differences between the actual and expected rate of mortality, pressure ulcers, urethral catheterization and physical restraints) were then analyzed by weighted least squares regression. Results suggest considerable interfacility variation in rates for these outcome indicators. A portion of this variation is significantly attributable to resident characteristics (P < or = 0.05). However, variation in outcomes in Pennsylvania facilities is also associated with facility characteristics (e.g., size and for-profit status), and environmental characteristics (e.g., per capita income and bed supply). Implications for nursing home management and policy are considered.