Nearly 3,000 of the roughly 16,000 U.S. nursing homes underwent "ownership conversions"-a switch from nonprofit to for-profit status (or vice versa)-between 1993 and 2004 according to a recent study. To determine whether these conversions had an effect on nursing home performance, researchers from Harvard University analyzed changes in occupancy, payer mix, staffing ratios, and a range of quality indicators. They found that nursing homes that converted from nonprofit to for-profit status generally provided lower-quality care than nursing homes that went from for-profit to nonprofit status.
This was not surprising to Charlene Harrington, professor of sociology and nursing in the Department of Social and Behavioral Sciences at the University of California, San Francisco (UCSF). "Literature has confirmed that nonprofit institutions are much better in general," she said. "They have higher staffing, higher wages, and lower turnover of employees. Those factors are important in ensuring that patients receive better quality care."
The study found that the conversion itself was not usually to blame for changes in an institution's quality. Before the conversions, for-profit facilities often had increased rates of occupancy and staffing and were considered "generally improving performers," while nonprofits had lower occupancy rates and fewer nursing hours and were considered "generally declining performers."
Why would a for-profit company buy a declining home and sell an improving home? The answer: to boost profits for shareholders. High-performing nursing homes may be less profitable than declining homes. In contrast, nonprofits don't have to answer to shareholders, so they judge effective management by measuring quality rather than profits.
"The main way for-profit nursing homes save money is by cutting staffing," said Harrington, who is also associate director of the John A. Hartford Center of Geriatric Nursing Excellence at UCSF. "We know higher staffing is strongly related to higher quality. Heavy workloads also result in higher turnover, which in turn can lead to higher staffing vacancy rates."
Tammy Worth