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

55 Pages Posted: 18 Mar 2016

See all articles by Cécile Martin

Cécile Martin

Université Paris Dauphine

Tiphaine Jerome

University Grenoble Alpes - Center for Studies and Applied Research in Management (CERAG)

Date Written: March 15, 2016

Abstract

Over the past ten 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.

Keywords: nursing homes, cost efficiency, chain affiliation, frontier models

JEL Classification: I1, L5

Suggested Citation

Martin, Cécile and Jerome, Tiphaine, Cost (In)Efficiency and Institutional Pressures in Nursing Home Chains (March 15, 2016). European Accounting Review Forthcoming, Available at SSRN: https://ssrn.com/abstract=2748241

Cécile Martin

Université Paris Dauphine ( email )

Place du Maréchal de Tassigny
Paris, Cedex 16 75775
France

Tiphaine Jerome (Contact Author)

University Grenoble Alpes - Center for Studies and Applied Research in Management (CERAG) ( email )

150 Rue de la Chimie
Saint-Martin-d'Hères, 38040
France

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