Smoke without Fire: Nursing Facility Closures in California, 1997–2001

The effect of nursing home closure on local employment in the United States

OBJECTIVE

To estimate the effect of nursing home closure on local employment, overall, and by rurality.

DATA SOURCES AND STUDY SETTING

We obtained 2008-2018 county-level data from the Quarterly Workforce Indicators, Medicare Provider of Services, Area Health Resource, and Urban Influence Codes files. From 2008 to 2018, 878 counties experienced at least one nursing home closure, and 2055 counties did not experience a closure.

STUDY DESIGN

Using a difference-in-difference study design, we compare the changes of total employment, health sector employment and non-health sector employment over time between counties with and without a nursing home closure. We utilize the variation in the year and quarter of nursing home closures to estimate subsequent employment changes as well as employment trends before closure. We also account for contemporaneous events including nursing home entries and hospital entries and closures, and evaluate heterogeneity by rurality.

DATA EXTRACTION

We include data on nursing home closure from the Medicare Provider of Service file. Quarterly county-level employee counts were obtained from the Quarterly Workforce Indicators provided by the Census Bureau. County-level demographic data were obtained from the Area Health Resource Files. We use Urban Influence Codes from the Economic Research Service, Department of Agriculture, to classify metropolitan, micropolitan, and rural (noncore) counties.

PRINCIPAL FINDINGS

Health sector employment decreased by about 3.2%-4.1% (p < 0.01) in counties with a nursing home closure. The reduction was largest in rural counties (approximately 7.2%-9.4%, p < 0.01). The reduction in health sector employment persisted over time, particularly in rural counties. Overall, there was no discernable effect on non-health sector employment.

CONCLUSIONS

Nursing home closure is associated with a persistent decline in health sector employment, particularly in rural counties, suggesting a reduction in the health care workforce and in the ability to sustain health care services supply, particularly in rural areas.

Characteristics of Home-Visit Nursing Agencies That Closed after the 2012 Fee Revision for Home-Visit Nursing Services: A Nationwide Panel Data Analysis in Japan

Despite the 2012 fee revision raising fees for home-visit nursing services to increase their supply in Japan, 300 to 500 home-visit nursing agencies (VNA) are still being closed annually. This study aims to identify the regional and organizational characteristics of the VNAs that closed after the 2012 fee revision. A longitudinal observational study was conducted using nationwide panel data of VNAs from 2014 to 2017 (N = 6496). Multiple logistic regression models stratified by years of operation were used for the analysis. We identified 821 closed agencies (12.6%). In this study, many important factors related to VNA closures were found. In the less than three years group, there were regional factors (lower aging rate and larger number of clinics) and an organizational factor (higher proportion of users under 40 years of age). In the 3–14 years group, there was a regional factor (larger number of clinics) and organizational factors (smaller number of FTE nurses, smaller number of users per FTE nurse, and smaller number of medical care types that can be provided). In the over 15 years group, there was an organizational factor (smaller number of FTE nurses). The findings provide valuable insights for policymakers in avoiding VNA closures.

Factors Associated with Assisted Living Facility Closure

BACKGROUND AND OBJECTIVES

Assisted living facilities (ALFs) have experienced rapid growth in the past few decades. The expansion in the number of ALFs may cause markets to become oversaturated, and a greater risk of unprofitable ALFs to close. However, no studies have investigated ALF closure. This study adapted a model developed for the nursing home market for the ALF market to examine the organizational, internal, and external factors associated with closure.

RESEARCH DESIGN AND METHODS

Data on 1,939 ALFs operating in 2013 from Florida were used to estimate a logistic regression to examine the organizational, internal, and external factors that were associated with closure between 2013 and 2015.

RESULTS

During the two-year study period, 141 ALFs (7.3%) closed. Significant factors associated with increased odds of closure included fewer beds, not accepting Medicaid, and more deficiencies. Two factors (market concentration and population density) were marginally significant.

DISCUSSION AND IMPLICATIONS

The results of this study confirm the usefulness of a model that includes organizational, internal, and external factors to predict ALF closure. These outcomes highlight the concerns that closure can affect access to community based long-term care, especially for rural older adults, and indicate an expansion of Medicaid acceptance in ALFs could be protective against closure.

The eldercare landscape: Evidence from California

Although the literature suggests that nursing home location is instrumental to the efficient functioning of the long-term care industry, there has been little research directly focused on the spatial distribution of nursing homes. We discuss factors that may influence nursing home location choice, emphasizing agglomeration economies around hospitals. We estimate econometric models of location using information on all freestanding, MediCal-licensed long-term care facilities in the state of California. We find that nursing homes are more likely to locate in the same Census tract as a hospital and are more likely to locate in tracts nearer to those containing a hospital.

Medicaid Nursing Facility Utilization

This study uses a longitudinal California data set (1995 to 2000) to address two concerns about Medicaid nursing facility (NF) utilization. First, to consider the impact of national cost-control policies, the authors analyze data trends in Medicaid NF participants, days of care, and expenditures. Second, the authors investigate the percentage of Medicaid days of care (%MDOC) using a panel regression model to consider resident, facility, and county market predictors. The findings show that although statewide Medicaid NF participants, expenditures, and%MDOC remain stable, Medicaid market segmentation persistes, with program participants distributed unevenly among facilities. Factors associated positively with facility%MDOC are the proportion of minority residents, a larger facility size, for-profit status, the percentage of aged Black persons in the county, and market concentration. The factors associated negatively with%MDOC are the percentages of resident men, residents aged 85 or older, residents with Alzheimer’s disease, Medicaid reimbursement rates, and county wealth.

The determinants of care home closure

This study investigates the causes of full closure of care homes in the English care home/nursing home market. We develop theoretical arguments about two causes for closure that are triggered by errors or external shocks: poor economic sustainability and regulatory action. Homes aiming to operate with lower quality in the market are argued for a number of reasons to be more susceptible to errors/shocks in setting quality, especially negative errors, leading to an empirical hypothesis that observed quality should negatively affect closure chance. In addition, given quality, homes facing relatively high levels of local competition should also have an increased chance of closure. We use a panel of care homes from 2008 and 2010 to examine factors affecting their closure status in subsequent years. We allow for the potential endogeneity of home quality and use multiple imputation to replace missing data. Results suggest that homes with comparatively higher quality and/or lower levels of competition have less chance of closure than other homes. We discuss that the results provide some support for the policy of regulators providing quality information to potential purchasers in the market.

Exploring the relationship between nursing home financial performance and management entrepreneurial attributes

PURPOSE

This paper explores the relationship between entrepreneurial orientation (EO) (i.e., their innovativeness, proactiveness and risk-taking) and financial performance in nursing homes. We hypothesize that nursing homes that are more proactive will report better short-term financial performance, while when firms with higher propensities for innovativeness and risk-taking will experience poorer financial performance in the short period due to the high costs associated with the initial adoption of innovation and with pursuing high-risks ventures.

DESIGN/METHODOLOGY/APPROACH

In 2004, a survey was developed and mailed to a population of 670 nursing homes in the state of Florida who were listed in the Florida Nursing Home Guide of the Agency for Health Care Administration. The final sample for this study included 104 respondents. The data from these surveys were merged with additional variables gathered from the 2004 Online Survey Certification and Reporting (OSCAR) system and the 2004/2005 Medicare Cost Reports (MCR). EO was operationalized using a nine-item scale adapted from Covin and Slevin (1989), and financial performance was assessed using total profit margin.

FINDINGS

The overall findings suggest partial support for the hypotheses. Support was found for the negative relationship between innovativeness and short-term financial performance, but only partial support was found for the relationship between performance and risk-taking. Our results demonstrated that the various aspects of entrepreneurial behaviors have a differential effect on firm performance.

PRACTICAL IMPLICATIONS

From a managerial perspective, nursing home administrators may continue to seek ways to be entrepreneurial while understanding that some activities may only lead to short-term profitability. These findings should not dissuade administrators from innovative behaviors. They do suggest, however, that innovative administrators should prepare for some initial decrease in profitability following new service implementation.

SOCIAL IMPLICATIONS

Findings suggest that to varying degrees, nursing home administrators may view themselves as being entrepreneurial despite the intense pressures from governments, poor public perceptions, decreasing reimbursement, more impaired residents, and increasing competition from substitute providers. Further administrators may need to manage the expectations of key stakeholders when they undertake innovative programs that will support social outcomes but which may not enhance short term financial performance.

VALUE/ORIGINALITY

This paper demonstrates the complex relationship between entrepreneurial activities and firm performance in nursing homes and has implications for the broader health care setting.

The impact of hospital-based skilled nursing facility closures on rehospitalizations

OBJECTIVE

To examine the effect of reductions in hospital-based (HB) skilled nursing facility (SNF) bed supply on the rate of rehospitalization of patients discharged to any SNF from zip codes that lost HB beds.

DATA SOURCE

We used Medicare enrollment records, Medicare hospital and SNF claims, and nursing home Minimum Dataset assessments and characteristics (OSCAR) to examine nearly 10 million Medicare fee-for-service hospital discharges to SNFs between 1999 and 2006.

STUDY DESIGN

We calculated the number of HB and freestanding (FS) SNF beds within a 22 km radius from the centroid of all zip codes in which Medicare beneficiaries reside in all years. We examined the relationship between HB and FS bed supply and the rehospitalization rates of the patients residing in corresponding zip codes in different years using zip code fixed effects and instrumental variable methods including extensive sensitivity analyses.

PRINCIPAL FINDINGS

Our estimated coefficients suggest that closure of 882 HB homes during our study period resulted in 12,000-18,000 extra rehospitalizations within 30 days of discharge. The effect was largely concentrated among the most acutely ill, high-need patients.

CONCLUSIONS

SNF patient-based prospective payment resulted in closure of higher cost HB facilities that had served most postacute patients. As other, less experienced SNFs replaced HB facilities, they were less able to manage high acuity patients without rehospitalizing them.

Why do nursing homes close? An analysis of newspaper articles

Using Non-numerical Unstructured Data Indexing Searching and Theorizing (NUD'IST) software to extract and examine keywords from text, the authors explored the phenomenon of nursing home closure through an analysis of 30 major-market newspapers over a period of 66 months (January 1, 1999 to June 1, 2005). Newspaper articles typically represent a careful analysis of staff impressions via interviews, managerial perspectives, and financial records review. There is a current reliance on the synthesis of information from large regulatory databases such as the Online Survey Certification And Reporting database, the California Office of Statewide Healthcare Planning and Development database, and Area Resource Files. Although such databases permit the construction of studies capable of revealing some reasons for nursing home closure, they are hampered by the confines of the data entered. Using our analysis of newspaper articles, the authors are able to add further to their understanding of nursing home closures.

Ownership conversion and closure in the nursing home industry

Ownership conversions and closures in the nursing home literature have largely been treated as separate issues. This paper studies the predictors of nursing home ownership conversions and closure in a common framework after the implementation of the Prospective Payment System in Medicare skilled nursing facilities. The switch in reimbursement regimes impacted facilities with greater exposure to Medicare and lower efficiency. Facilities that faced greater financial difficulty were more likely to be involved in an ownership conversion or closure, but after controlling for other factors the effect of exposure to Medicare is small. Further, factors that predict conversion were found to vary between not-for-profit and for-profit facilities, while factors that predict closure were the same for each ownership type.

Geographic concentration and correlates of nursing home closures: 1999-2008

BACKGROUND

While demographic shifts project an increased need for long-term care for an aging population, hundreds of nursing homes close each year. We examine whether nursing home closures are geographically concentrated and related to local community characteristics such as the racial and ethnic population mix and poverty.

METHODS

National Online Survey Certification and Reporting data were used to document cumulative nursing facility closures over a decade, 1999 through 2008. Census 2000 zip code level demographics and poverty rates were matched to study facilities. The weighted Gini coefficient was used to measure geographic concentration of closures, and geographic information system maps to illustrate spatial clustering patterns of closures. Changes in bed supply due to closures were examined at various geographic levels.

RESULTS

Between 1999 and 2008, a national total of 1776 freestanding nursing homes closed (11%), compared with 1126 closures of hospital-based facilities (nearly 50%). Combined, there was a net loss of over 5% of beds. The relative risk of closure was significantly higher in zip code areas with a higher proportion of blacks or Hispanics or a higher poverty rate. The weighted Gini coefficient for closures was 0.55 across all metropolitan statistical areas and 0.71 across zip codes. Closures tended to be spatially clustered in minority-concentrated zip codes around the urban core, often in pockets of concentrated poverty.

CONCLUSIONS

Nursing home closures are geographically concentrated in minority and poor communities. Since nursing home use among the minority elderly population is growing while it is declining among whites, these findings suggest that disparities in access will increase.

Factors associated with increasing nursing home closures

PURPOSE

We determine the rate of nursing home closures for 7 years (1999-2005) and examine internal (e.g., quality), organizational (e.g., chain membership), and external (e.g., competition) factors associated with these closures.

DESIGN AND METHOD

The names of the closed facilities and dates of closure from state regulators in all 50 states were obtained. This information was linked to the Online Survey, Certification, and Reporting data, which contains information on internal, organizational, and market factors for almost all nursing homes in the United States.

RESULTS

One thousand seven hundred and eighty-nine facilities closed over this time period (1999-2005). The average annual rate of closure was about 2 percent of facilities, but the rate of closure was found to be increasing. Nursing homes with higher rates of deficiency citations, hospital-based facilities, chain members, small bed size, and facilities located in markets with high levels of competition were more likely to close. High Medicaid occupancy rates were associated with a high likelihood of closure, especially for facilities with low Medicaid reimbursement rates.

IMPLICATIONS

As states actively debate about how to redistribute long-term care services/dollars, our findings show that they should be cognizant of the potential these decisions have for facilitating nursing home closures.

Determinants of performance failure in the nursing home industry

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.

California nursing facility quality and union environments

OBJECTIVE

Many studies have examined quality effects of nursing facility (NF) staffing, but few have examined effects of unionization. Concerned with possible effects of unionization on quality, we analyzed unionization and local market climate of unionization, predicting both complaints (reflecting either quality problems or better monitoring and advocacy) and the substantiation of serious complaints (indicating major quality problems).

METHOD

Data were analyzed on California freestanding NFs in 1999 (N = 1,155). OLS regression was employed to predict both quality complaints and serious violations, the latter both controlling and not controlling for numbers of complaints.

RESULTS

Unionized NFs showed more complaints than did non-unionized NFs. Non-unionized NFs had more serious violations, particularly when the proportion of other county facilities unionized was higher.

DISCUSSION

These findings suggest that unionization enhances problem reporting while, especially in stronger union environments, reducing the incidence of serious quality violations.

Nursing home closures, changes in ownership, and competition

This research examines the relationship of competition among nursing homes and the likelihood of their closure or change in ownership. The study uses nationally representative data from the 1992-1998 Online Survey, Certification, and Reporting system, and is supplemented with several other primary and secondary data sources. It is hypothesized that facilities located in more competitive environments will be more likely to close. Multinomial logistic regression analyses are employed to examine this hypothesis in a model containing organizational and aggregate resident characteristics, and market factors. The Herfindahl index is used as a measure of competition. The descriptive analysis shows that 621 nursing homes closed and 6,471 changed ownership from 1992 to 1998. The incidence rate of closures was .7% of facilities per year. The multivariate analysis shows that facilities located in more competitive environments were significantly more likely to close.

Quality of care in nursing home organizations: Establishing a health services research agenda

Health services research has led to exciting new findings about the critical importance of the amount and type of nursing staff in nursing homes for improving the processes and outcomes of care. This paper reviews recent theoretical and research issues and outlines areas where research is needed. The nursing home research agenda for the future needs to concentrate on: (1) the relationship between structural measures of nursing (eg, staffing levels, education, turnover rates) and the outcomes and processes of care; (2) adequate processes of care and ways to improve the reliability of clinical outcome measures; (3) better ways to risk-adjust for resident characteristics; (4) the impact of nursing home characteristics (eg, ownership) and public policies (eg, reimbursement) on structural factors, processes, and outcomes; and (5) cost-effectiveness studies of nursing care at the organizational or system level.

Chain Reaction

This paper reports on an exploratory study of nursing home bankruptcy. From state and industry data regarding nearly 1,000 California facilities, it was possible to identify 155 homes in five chains (multi-facility organizations) that were operating in bankruptcy in 2000. When compared with facilities in non-bankrupt chains, while the bankrupt chain facilities had significantly worse financial liquidity, higher administrative costs, and higher payables to related parties, they also had more Medicare residents, fewer Medicaid residents, better solvency, and were located in less competitive county markets and in areas with higher Medicaid reimbursement rates. These findings indicate that, rather than facility characteristics and local market factors, strategic decisions taken at the corporate (chain) level are the major determinants of nursing facility bankruptcy status.

Case study: development of and stakeholder responses to a nursing home consumer information system

California Nursing Home Search (www.calnhs.org), launched in October 2002, provides information about nursing home quality to a broad range of stakeholders. This case study discusses the process of developing a consumer-oriented nursing home Web site and presents an analysis of postlaunch responses from a number of sources (i.e., media, outreach, Web site use, correspondence, meetings, interviews) to determine the impact of the site and how it can be improved and used as an example. Consumers found the Web site valuable, but some needed clarification on navigation. Providers had complaints about the use of quality ratings and concerns about public availability of the data. Most discharge planners and care managers do not use Internet resources to find facilities. Feedback, modifications, updates, and outreach are needed on a continuous basis to ensure the site is a helpful tool for all stakeholders.