Performance Improvement 2008. Did Nursing Home Chains Divest, Withdraw from Markets, or Change Corporate Structure Due to Rising Liability Claims and Medicare Prospective Payments?


This study extended previous work that found that many nursing home chains have been reacting to environmental changes by divesting ownership of facilities in certain markets and pursuing other types of corporate restructuring. Large nursing home chains were reportedly choosing to divest, withdraw from a specific market, or change corporate structure in response to rising liability claims and introduction of a prospective payment system. Researchers reviewed literature on the topic, interviewed stakeholders, and analyzed corporate ownership using the On-Line Survey, Certification, and Reporting (OSCAR) data system. Because of the dominance of national chains among nursing homes, the study emphasized large chain activities in particular.

The national chain sector was found to be smaller and focused differently than it was ten years ago. Government financing remains vital, with corporate structure also heavily influenced by factors such as litigation, State reimbursement, and geography. The industry today maintains a moderately healthy capital structure. The industry's re-emergence and relatively better financial condition were attributed to more rational portfolios of nursing home ownership, improved access to capital, and improved Medicare reimbursement.

Report Title: Nursing Home Divestiture and Corporate Restructuring: Final Report.
Agency Sponsor: ASPE-ODALTCP, Office of Disability, Aging, and Long-Term Care Policy
Federal Contact: Susan Polniaszek, 202-690-6443
Harvard University, Harvard Medical School

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