Cost (In)Efficiency and Institutional Pressures in Nursing Home Chains

Abstract

Over the past 10 years, merger activities in the private for-profit nursing home industry have been increasing in Europe. In this paper, we investigate chain affiliation's influence on the performance of lucrative nursing homes. We measure performance using a cost frontier estimated by stochastic analysis on a sample of 370 French for-profit nursing homes. We find that cost efficiency decreases with the number of facilities in a chain. We also identify different external actor types in nursing homes' institutional environment and test their influence. We show that nursing home chains' cost efficiency improves when local governments and shareholders exert pressure. Our results are robust to alternative model specifications and another definition of costs. Overall, our findings inform researchers, as well as standards setters, of the relevance of chain affiliation and of the role of institutional pressures regarding cost containment at the nursing home level.

Investigation of the institutional and decision-usefulness factors in the implementation of accrual accounting reforms in the public sector of Tanzania

“…The level of political commitment is crucial to the effective implementation of accrual accounting in public sector financial reporting, since changing the basis of accounting requires considerable financial and non-financial resources along with long-term commitment. It is also necessary to legitimise the role of the public sector working as a pressure group to other institutions dependent on it for resources (Martin and Jérôme, 2016). Studying reforms in government accounting in New Zealand and the UK, Ellwood and Newberry (2007) find that the institutionalisation of accrual accounting in the public sector reduces the debate of the government’s dual role as “procurer of services” and “rule setter” that nurtured a culture of transparency and accountable society.…”

Market concentration, supply, quality and prices paid by local authorities in the English care home market

“…(2009) (Flanders); Farsi and Filippini (2004) (Switzerland). An exception is Martin and Jérôme (2016) who analyze the for‐profit sector in France concluding that nursing homes which are part of a chain may be less cost‐efficient than those which are not part of a chain.…”