This article is a qualitative study of two skilled nursing facilities. The research was designed to investigate how the homes coped with the demands of government regulation for state licensure and Medicaid! Medicare certification. Regulatory responses were found to be tightly associated with the organizational cultures of the two homes. In one home, residents and staff members represented the same ethnic and social class group. Relations among and between staff members, residents, and residents' family members tended to be informal, with the result that the home had little concern that families would complain to external regulatory bodies. The second home was characterized by sociocultural heterogeneity between residents and staff. Tension between these two groups resulted in family complaints which, in turn, triggered defensive strategies designed to protect the home from regulatory interventions.

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