Advisory Committee Chair
Robert Weech-Maldonado
Advisory Committee Members
Justin Blackburn
Nathaniel Carroll
Amy Landry
Grant T Savage
Document Type
Dissertation
Date of Award
2018
Degree Name by School
Doctor of Philosophy (PhD) School of Health Professions
Abstract
Nursing homes operate in a tumultuous and changing environment and are under increasing financial pressure, risk of closure, and financial distress. The issue of financial distress has been explored tangentially within the nursing home industry. This study is the first to validate the Altman Z-Score, a financial distress prediction model, within the nursing home context. The Altman Z-Score model uses multiple discriminate analysis (MDA) to examine multiple financial ratios (liquidity, efficiency, profitability and net worth) simultaneously to predict the likelihood of a firm’s financial distress. After calculating the Z-Score, clustering was used to classify the observations into three groups, distressed, risk-of-distress and financially healthy nursing homes. After the nursing home observations were classified according to risk of financial distress, the organizational and environmental factors that facilitate financial distress were explored. Resource Dependency Theory and Porter’s Five Forces of Competition framework where used to conceptualize the organizational and environmental factors associated with financial distress. It was found that the organizational level variables, such as, occupancy, payer-mix, size and chain-affiliation had a significant impact on nursing home financial distress. The effects of external market forces on nursing home financial distress were limited, as only county-level Medicaid concentration; prevalence of home health agencies, and number of hospital-based SNF beds were found to have a significant impact on nursing home financial distress. Lastly, this study explored the relationship between financially distressed nursing homes and resident’s quality of care. The Resource-Based View of the Firm theory and Donabedian’s structure-process-outcomes framework were used to explore the relationship between nursing home financial distress and quality of care. Nursing homes in risk-of-distress had higher RN, LPN, CNA staffing intensity and RN staffing mix but lower prevalence of catheters as compared to distressed nursing homes. Healthy nursing homes had higher LPN and CNA staffing but lower use of restraints and prevalence of contractures as compared to distressed nursing homes. These findings will help policy makers and practitioners be able to identify financially distressed nursing homes, understand what organizational and environmental factors facilitate distress, and the impact that nursing home financial distress can have on resident’s health outcomes.
Recommended Citation
Lord, Justin Caleb, "Financial Distress – Causes And Consequences: An Examination Of The Nursing Home Industry" (2018). All ETDs from UAB. 2337.
https://digitalcommons.library.uab.edu/etd-collection/2337
