Under pressure: Reputation, ratings, and inaccurate self‐reporting in the nursing home industry

Abstract

Research Summary: This paper examines firms' strategic responses to reputational pressures in a critical healthcare domain-the U.S. nursing home industry. We investigate whether organizations improved in terms of care quality following an exogenous change in the required number of nursing hours associated with star-based ratings to which nursing homes are subject. We show that although firms at risk of losing a star tended to self-report higher staffing levels after the policy change, these reported increases were not associated with improvements in an important patient outcome-bedsores. These findings are consistent with false reporting of staffing data, or insufficient or ineffective hiring practices. Although we cannot definitively establish the existence of false reporting, supplementary analyses offer little support for the latter two possibilities. Managerial Summary: Third-party ratings systems often stipulate that firms meet certain standards to attain a favorable evaluation. Firms must make strategic decisions about whether and how to comply with these. This paper examines firms' strategic responses to changes in the required number of nursing hours associated with star-based ratings in the nursing home industry. Our results indicate that firms at risk of losing a star responded by reporting staffing increases. However, we find no concurrent improvement in a patient outcome that previous research suggests should change as a result of increased staffing.We investigate whether the lack of improvement may be due to insufficient or ineffective hiring, and find scant evidence of either one. Although we lack direct evidence

The opportunities and challenges of behavioral field research on misconduct

“…Publicly-owned hospitals prioritize patients who are representative of voter sentiment. We know very little about how organizational form affects the propensity of and type of misconduct, and this paper also contributes to the growing literature on misconduct related to health care organizations (Snyder, 2010;Ody-Brasier & Sharkey, 2019). Douthit, Millar, and White (this issue) examine fraudulent "doubling" of taxi fares in New York City, where drivers falsely claim that a trip took them outside the city limits, allowing them to double the rate for an unneeded trip back to the city limits.…”

The Politics of Reactivity: Ambivalence in corporate responses to corporate social responsibility ratings

“…Organizational resistance to ratings can take the form of 'gaming', whereby organizations provide incomplete or inaccurate information to the evaluator to improve their rating. Such gaming undermines the motivation behind evaluation criteria (Espeland & Sauder, 2007) as shown for example in a study of nursing homes in the United States, where higher reported staff numbers necessary to obtain high ratings did not lead to improvements in care outcomes (Ody-Brasier & Sharkey, 2019). Organizations not only 'internalize' expectations from rating agencies (Espeland & Sauder, 2007) but also interpret rankings in ways that best serve their needs.…”

Avoiding the Appearance of Virtue: Reactivity to Corporate Social Responsibility Ratings in an Era of Shareholder Primacy

“…Given the proliferation of these rating systems and their intention to drive change in behavior, understanding how organizations respond to ratings has become an important area of scholarly inquiry (Tolbert, 2018). To date, scholarship on reactivity to ratings has illustrated how unfavorable evaluations can drive improvements in subsequent performance (Jin and Leslie, 2003; Chatterji and Toffel, 2010; Sharkey and Bromley, 2015; Rowley, Shipilov, and Greve, 2017; Ody-Brasier and Sharkey, 2019). From a theoretical standpoint, this research stream has generally reasoned that receiving a favorable rating is beneficial because it enhances external perceptions of the organization, thus strengthening its reputation (Lange, Lee, and Dai, 2011).…”

“…1 Some scholars, for example, have noted how “high scores on a rating” generally lead to a “positive reputation,” while “low scores on a rating” generally lead to a “negative reputation” (Rowley, Shipilov, and Greve, 2017: 818). Because strong reputations are presumed to be a valuable resource (Fombrun and Shanley, 1990; Barney, 1991; Roberts and Dowling, 2002), and positive evaluations are expected to generate positive perceptions that enhance organizational reputation (Rindova et al, 2005; Espeland and Sauder, 2007; Bermiss, Zajac, and King, 2014), scholars have typically concluded that organizations will strive to improve or sustain a certain performance level to avoid the negative consequences of a poor rating and obtain or maintain the benefits of a good rating (Sharkey and Bromley, 2015; Ody-Brasier and Sharkey, 2019).…”