Does Organization Ownership Matter? Structure and Performance in For-Profit, Nonprofit and Local Government Nursing Homes

Abstract

We compare the structure and performance of for-profit (FP), nonprofit (NP) and local government (LG) organizations. These organizations differ in their ownership structure, objectives and agency relations. We conjecture that, compared to NP and LG, FP firms (a) delegate less decision-making power to employees, (b) provide more incentives and fewer fringe benefits, (c) monitor less, and (d) rely less on social networks to recruit employees. We also hypothesize that, relative to NP and LG, FP firms (i) are more efficient, (ii) provide similar levels of service elements that observable to their customers, (iii) provide lower levels of less-well observable elements, and (iv) provide less of the relational elements. Differences in structure and performance are likely to be tempered by regulation, market competition and institutional pressures for similarity. We study detailed performance outcomes for all the 369 Minnesota nursing homes included in federal and state datasets, and organization structure for a subsample of 105 homes that responded to our survey. Our empirical investigation generally supports our hypotheses. In particular, we find that FP homes serve more residents than NP and LG, after controlling for quality differences. However, FP homes provide lower quality services on a large array of attributes, especially those that are less observable by nursing home residents and their families. The differences among different types of organization are small, but significant. [list] who provided data and helped making sense of them. We also thank [list] who worked on the preparation and administration of the survey; nursing home administrators who responded to the survey were instrumental in the development of this project.

Determinants of Nursing Homes Performance: The Case of Portuguese Santas Casas da Misericórdia

“…Jensen and Meckling, 1976;Anderson et al, 1999). In addition, non-prot Nursing Homes focus on the quality of care provided, and nancial results are considered secondary (Ben-Ner and Ren, 2008). Given the Portuguese context, Nursing Homes must meet sta ratios for each Nursing Home (art.…”

“…However, concerning prot Nursing Homes, the nancial and economic results appear as priorities. In what non-prot Nursing Homes are concerned, those aspects are contemplated in a secondary way, being the quality of the services provided to users the main focus (Ben-Ner and Ren, 2008). Rantz et al (1998) interviewed a group of individuals involved in the provision of care, such as administrators, nurses, regulators, and other collaborators about the quality of care.…”

“…In Nursing Homes with poor quality of care, the main focus is not dened, which may be the nancial survival of Nursing Home and nancial results, regardless of the user needs. As Ben-Ner and Ren (2008) found in non-prot Nursing Homes, the objective is to provide the highest quality of services to users, regardless of the associated costs. This does not occur in prot Nursing Homes because nancial results prevail, which invest less in the quality of care (Li et al, 2013).…”

The Interplay of Form, Structure, and Embeddedness in Social Intrapreneurship

“…As a result, theories such as agency and transaction cost economics have been used to study the preference of nonprofit or for-profit forms on the basis of information asymmetry, incentives, and constraints (Borzaga & Tortia, 2006;Glaeser & Shleifer, 2001). In this vein, nonprofit and for-profit forms represent alternative governance structures for organizing transactions, with their relative efficiencies dependent on the level of concerns regarding moral hazard and adverse selection (Ben-Ner & Ren, 2008).…”

A Comparative Study of Allocation of Decision‐making Across Stakeholder Groups: The Case of Personal Care Industries

“…We have three types of ownership among nursing homes and childcare centers, but no government group homes among the respondents. Ben‐Ner and Ren (2009) compare survey respondents and nonrespodents among nursing homes using multiple datasets and conclude that there is no evidence for a selection bias (no parallel analysis could be performed for the other two industries).…”