Do Mandatory Overtime Laws Improve Quality? Staffing Decisions and Operational Flexibility of Nursing Homes

Management Science, Forthcoming

41 Pages Posted: 11 Apr 2016 Last revised: 14 May 2016

See all articles by Susan F. Lu

Susan F. Lu

Purdue University - Krannert School of Management

Lauren Xiaoyuan Lu

University of North Carolina Kenan-Flagler Business School

Date Written: April 1, 2016

Abstract

During the 2000s, over a dozen U.S. states passed laws that prohibit health care employers from mandating overtime for nurses. Using a nationwide panel dataset from 2004 to 2012, we find that these mandatory overtime laws reduced the service quality of nursing homes, as measured by an increase in deficiency citations. This outcome can be explained by two undesirable changes in the staffing hours of registered nurses: decreased hours of permanent nurses and increased hours of contract nurses per resident day. We observe that the increase in deficiency citations concentrates in the domains of administration and quality of care rather than quality of life, and the severity levels of the increased citations tend to be minor rather than major. We also find that the laws’ negative effect on quality is more severe in nursing homes with higher percentage of Medicare-covered residents. These observations are consistent with the predictions of a stochastic staffing model that incorporates demand uncertainty and operational flexibility. Further, we rule out an alternative hypothesis that the quality decline is induced by an increase in nurse wages.

Keywords: Nurse Staffing, Mandatory Overtime Law, Health Care Quality, Flexibility, Demand Uncertainty, Stochastic Program, Registered Nurses

Suggested Citation

Lu, Susan Feng and Lu, Lauren Xiaoyan, Do Mandatory Overtime Laws Improve Quality? Staffing Decisions and Operational Flexibility of Nursing Homes (April 1, 2016). Management Science, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2759950

Susan Feng Lu

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

HOME PAGE: http://https://sites.google.com/site/susanluhome/home

Lauren Xiaoyan Lu (Contact Author)

University of North Carolina Kenan-Flagler Business School ( email )

McColl Building, CB#3490
Chapel Hill, NC 27599
United States

HOME PAGE: http://public.kenan-flagler.unc.edu/faculty/lul/index.htm

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