Exploring the relationship between private equity ownership and nursing home performance: A review

Advances in Health Care Management

Volumn 11, Issue , 2011, Pages 63-89

  Pradhan, Rohit ^a   Weech Maldonado, Robert ^a  

^a UNIVERSITY OF ALABAMA AT BIRMINGHAM   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

ECONOMICS; NURSING HOME; ORGANIZATION AND MANAGEMENT; REVIEW; STANDARD;

EFFICIENCY, ORGANIZATIONAL; NURSING HOMES; OWNERSHIP; PRIVATE SECTOR;

EID: 84873041874     PISSN: 14748231     EISSN: None     Source Type: Book Series    
DOI: 10.1108/S1474-8231(2011)0000011007     Document Type: Review

References (99)

1. Agency for Healthcare Administration. (2007). Long term care review: Florida nursing homes regulation, quality, ownership, and reimbursement. Washington DC: Agency for Healthcare Administration.
2. Almazan, A., Hartzell, J. C., & Starks, L. T. (2005). Active institutional shareholders and costs of monitoring: Evidence from executive compensation. Financial Management, 34(4), 5-34. (Pubitemid 43132247)
3. American City Business Journals. (2000). Tough times for nursing home operator. Atlanta: American City Business Journals.
4. Banaszak-Holl, J., Berta, W. B., Bowman, D. M., Baum, J. A. C., & Mitchell, W. (2002). The rise of human service chains: Antecedents to acquisitions and their effects on the quality of care in US nursing homes. Managerial and Decision Economics, 23(4-5), 261-282.
5. Bauer, M., Bilo, S., & Zimmermann, H. (2001). Publicly traded private equity: An empirical investigation. Basel: University of Basel.
6. Baysinger, B. D., & Butler, H. N. (1985). Corporate governance and the board of directors: Performance effects of changes in board composition. The Journal of Law, Economics, & Organization, 1(1), 101-124.
7. Blundell-Wignall, A. (2007). The Private Equity Boom: Causes and Policy Issues. Retrived on 06/16 from http://www.oecd.org/dataoecd/36/59/40973739.pdf. Paris: Organization of Economic Cooperation and Development.
8. Bowers, B. J., Esmond, S., & Jacobson, N. (2000). The relationship between staffing and quality in long-term care facilities: Exploring the views of nurse aides. Journal of Nursing Care Quality, 14(4), 55-64quiz 73-55.
9. Bradford, H. B. (Ed.) (1986). For-profit enterprise in health care. Washinton DC: National Academy Press.
10. Bull, I. (1989). Financial performance of leveraged buyouts: An empirical analysis. Journal of Business Venturing, 4, 263-279.
11. Business Wire. (2002). Genesis health ventures emerges from bankruptacy. Atlanta: Business Wire.
12. Capon, N., Farley, J. U., & Hoenig, S. (1990). Determinants of financial performance: A metaanalysis. Management Science, 36(10), 1143-1159.
13. Centers for Disease Control. (2004). The national home survey 2004: Overview. Washington DC: Centers for Disease Control.
14. Covitz, D., & Liang, N. (2001). Recent developments in the private equity market and the role of preferred returns. Washington DC: Board of Governors of the Federal Reserve System.
15. Cuny, C. J., & Talmor, E. (2007). A theory of private equity turnarounds. Journal of Corporate Finance, 13(4), 629-646.
16. Daily, C. M., Dalton, D. R., & Cannella, A. A. (2003). Corporate governance: Decades of dialogue and data. The Academy of Management Review, 28(3), 371-382. (Pubitemid 36881220)
17. Davis, M. A. (1993). Nursing home ownership revisited: Market, cost and quality relationships. Medical Care, 31(11), 1062-1068.
18. Demsetz, H. (1983). The structure of ownership and the theory of the firm. Journal of Law and Economics, 26, 375-390.
19. Denis, D. J., Denis, D. K., & Sarin, A. (1997). Ownership structure and top executive turnover. Journal of Financial Economics, 45(2), 193-222.
20. Department of Health and Human Services. (2006). The nursing home liablity insurance market: A case study of Florida. Washington DC: Department of Health and Human Services.
21. Desbrieres, P., & Schatt, A. (2002). The impacts of LBOs on the performance of acquired firms: The French case. Journal of Business Finance & Accounting, 29(5 & 6).
22. Duhigg, C. (2007, October 24). Inquries at investor owned nursing homes. The New York Times.
23. Easton, G. S., & Jarrell, S. L. (1998). The effects of total quality management on corporate performance: An empirical investigation. Journal of Business, 71(2), 253-307. (Pubitemid 128345709)
24. Eisenhardt, K. M. (1989). Agency theory: An assessment and review. The Academy of Management Review, 14(1), 57-74.
25. Feng, Z., Grabowski, D. C., Intrator, O., Zinn, J., & Mor, V. (2008). Medicaid payment rates, case-mix reimbursement, and nursing home staffing - 1996-2004. Medical Care, 46(1), 33-40.
26. Fenn, G. W., Liang, N., & Prowse, S. (1995). The economics of the private equity market. Washington DC: Board of Governors of the Federal Reserve System.
27. Fenn., G. W., Liang., N., & Prowse., S. (2005). The economics of private equity market. Washington DC: Board of Governors of the Federal Reserve System.
28. Financial Services Authority. (2006). Private equity: A discussion of risk and regulatory engagement. London: Financial Services Authority.
29. Fox, I., & Marcus, A. (1992). The causes and consequences of leveraged management buyouts. Academy of Management Review, 17(1), 62-85.
30. Friedman, B., & Shortell, S. (1988). The financial performance of selected investor-owned and not-for-profit system hospitals before and after Medicare prospective payment. Health Services Research, 23(2), 237-267.
31. Fries, B. E., Schneider, D. P., Foley, W. J., Gavazzi, M., Burke, R., & Cornelius, E. (1994). Refining a case-mix measure for nursing homes: Resource Utilization Groups (RUG-III). Medical Care, 32(7), 668-685.
32. Giacalone, A. J. (2001). The US Nursing Home Industry. New York: M.E. Sharpe.
33. Governemnt Accountability Office. (1991). Management practices: U.S. companies improve performance through quality efforts. Washington DC: Government Accountability Office.
34. Governemnt Accountability Office. (1999). Medicare post-acute care: Better information needed before modifying BBA reforms. Washington DC: Government Accountability Office.
35. Governemnt Accountability Office. (2000a). Nursing homes: Sustained efforts are essential to realize potential of the quality initiatives-report to the special committee on aging, U.S. senate. Washington DC: Government Accountability Office.
36. Governemnt Accountability Office. (2000b). Nursing homes: Aggregate Medicare payments are adequate despite bankruptcies. Washington DC: Government Accountability Office.
37. Governemnt Accountability Office. (2002). Providers have reacted to Medicare payment system by changing practices. Washington DC: Government Accountability Office.
38. Governemnt Accountability Office. (2003). Nursing home quality: Prevalence of serious problems, while declining, reinforces importance of enhanced oversight. Washington DC: Government Accountability Office.
39. Governemnt Accountability Office. (2008). Nursing homes: Federal monitoring surveys demonstrate continued understatement of serious care problems and CMS oversight weaknesses. Washington DC: Government Accountability Office.
40. Governemnt Accountability Office. (2011). Complexity of private investment purchases demonstrates need for CMS to improve the usability and completeness of ownership data. Washington DC: Government Accountability Office.
41. Hambrick, D. C., & Mason, P. A. (1984). Upper echelons: The organization as a reflection of its top managers. The Academy of Management Review, 9(2), 193-206.
42. Harrington, C., Kovner, C., Mezey, M., Kayser-Jones, J., Burger, S., Mohler, M., et al. (2000). Experts recommend minimum nurse staffing standards for nursing facilities in the United States. Gerontologist, 40(1), 5-16. (Pubitemid 30170186)
43. Harrington, C., Mullan, J. T., & Carrillo, H. (2004). State nursing home enforcement systems. Journal of Health Politics, Policy and Law, 29(1), 43-73. (Pubitemid 38258197)
44. Harrington, C., Woolhandler, S., Mullan, J., Carrillo, H., & Himmelstein, D. U. (2001). Does investor ownership of nursing homes compromise the quality of care? American Journal Public Health, 91(9), 1452-1455. (Pubitemid 32803333)
45. Harrington, C., Woolhandler, S., Mullan, J., Carrillo, H., & Himmelstein, D. U. (2002). Does investor-ownership of nursing homes compromise the quality of care? International Journal Health Services, 32(2), 315-325. (Pubitemid 34619859)
46. Hearing on nursing home bankruptcies: What caused them? Before the Senate Special Committee on Aging, United States Senate, 105th Congress (2000). Testimony of George Grub, US Department of Health and Human Services. Retrieved from http://aging.senate.gov/hearing-detail.cfm?id-272282& (last accessed May 15, 2011).
47. Hillmer, M. P., Wodchis, W. P., Gill, S. S., Anderson, G. M., & Rochon, P. A. (2005). Nursing home profit status and quality of care: Is there any evidence of an association? Medical Care Research and Review, 62(2), 139-166. (Pubitemid 40397251)
48. Ingley, C. B., & Walt., N. T. V. D. (2001). The Strategic Board: The changing role of directors in developing and maintaining corporate capability. Corporate Governance An International Review, 9(3), 174-185.
49. Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance, and takeovers. American Economic Review, 76(2), 323.
50. Jensen, M. C. (1989). Eclipse of the public corporation. Harvard Business Review, 67(5), 61-74.
51. Jensen, M. C. (2007). The economic case for private equity (and some concerns). Paper presented at the Harvard Business School Centennial Conference on Private Equity. Retrieved from http://ssrn.com/abstract-963530 (last accessed May 15, 2011).
52. Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360.
53. Johnson-Pawlson, J., & Infeld, D. L. (1996). Nurse staffing and quality of care in nursing facilities. Journal of Gerontolgical Nursing, 22(8), 36-45.
54. Kaiser Foundation. (2010). U.S. Healthcare Costs. Retrieved from http://www.kaiseredu.org/ Issue-Modules/US-Health-Care-Costs/Background-Brief. aspx
55. Kaplan, S. N., & Schoar, A. (2005). Private equity performance: Returns, persistence, and capital flows. The Journal of Finance, 60(4), 1791-1823.
56. Kaplan, S. N., & Strömberg, P. (2008). Leveraged buyouts and private equity. Cambridge, MA: National Bureau of Economic Research.
57. Kitchener, M., O'Neill, C., & Harrington, C. (2005). Chain reaction: An exploratory study of nursing home bankruptcy in California. Journal of Aging & Social Policy, 17(4), 19-35.
58. Konetzka, R. T., Norton, E. C., Sloane, P. D., Kilpatrick, K. E., & Stearns, S. C. (2006). Medicare prospective payment and quality of care for long-stay nursing facility residents. Medical Care, 44(3), 270-276. (Pubitemid 43755455)
59. Kosnik, R. D. (1987). Greenmail: A study of board performance in corporate governance. Administrative Science Quarterly, 32(2), 163-185.
60. Kostiuk, F. P. (1990). Firm size and executive compensation. The Journal of Human Resources, 25(1), 90-105.
61. Lehn, K., & Poulsen, A. (1989). Free cash flow and stockholder gains in going private transactions. The Journal of Finance, 40(3), 771-787.
62. Liu, K., Gage, B., Harvell, J., Stevenson, D., & Brennan, N. (1999). Medicare's post-acute care benefit: Background, trends, and issues to be faced. Washinton DC: Urban Institute.
63. Long, F. W., & Ravenscraft, J. D. (1993). The Financial Performance of Whole Company LBOs (Discusison Paper No. CES 93). Washington DC:US Bureau of Census.
64. Lorsch, J., & Young, J. (1990). Pawns or potentates: The reality of America's corporate boards. The Executive, 4(4), 85-87.
65. LTCQ Incorporation. (2008). Acquisition of nursing home chains by private investment groups: Abbreviated analysis of the New York Times article. Boston: LTCQ Incorporation.
66. Maani, K. E., Putterill., M. S., & Sluti., D. G. (1994). Empirical analysis of quality improvement in manufacturing. The International Journal of Quality & Reliability Management, 11(7), 19. (Pubitemid 24830408)
67. Medicare Payment Advisory Commission. (2003). Assessing payment adequacy and updating payments for skilled nursing facility services. Washinton DC: Medicare Payment Advisory Commission.
68. Murphy, J. K. (1985). Corporate performance and managerial renumeration: An empeirical evidence. Journal of Accounting and Finance, 7, 11-42.
69. PR Newswire. (2000a, 07/11/2008). Genesis Health Ventures Files Ch. 11. PR Newswire. p. 4.
70. PR Newswire. (2000b, 01/18). Mariner Post-Acute Network Announces Filing for Chapter 11 PR Newswire, p. 1.
71. PR Newswire. (2002, 05/14). Mariner Post-Acute Network, Inc. and Mariner Health Group, Inc. Emerge From Chapter 11. PR Newswire, p. 1.
72. Nikoskelainen, E., & Wright, M. (2007). The impact of corporate governance mechanisms on value increase in leveraged buyouts. Journal of Corporate Finance, 13(4), 511-537.
73. O'Neill, C., Harrington, C., Kitchener, M., & Saliba, D. (2003). Quality of care in nursing homes: An analysis of relationships among profit, quality, and ownership. Medical Care, 41(12), 1318-1330.
74. Opler, C. T. (1992). Operating performance in leveraged buyouts: Evidence from 1985-1989. Financial Management, 21(1), 27-34.
75. Phalippou, L., & Gottschalg, O. (2009). The performance of private equity funds. The Review of Financial Studies, 22(4).
76. Pradhan, R. (2010). Quality and financial performance of private equity nursing homes in Florida. Doctoral Dissertation, University of Florida.
77. Renneboog, L., Simons, T., & Wright, M. (2007). Why do public firms go private in the UK? The impact of private equity investors, incentive realignment and undervaluation. Journal of Corporate Finance, 13(4), 591-628.
78. Robbins, C. J., Rudsenske, T., & Vaughan, J. S. (2008). Private equity investment in health care services. Health Affairs (Millwood), 27(5), 1389-1398.
79. Rosenau, P. V., & Linder, S. H. (2003). Two decades of research comparing for-profit and nonprofit health provider performance in the United States. Social Science Quarterly, 84(2), 219-241. (Pubitemid 36737556)
80. Saphir, A. (2000). Rebuilding from the rubble: Crain Communications, Incorporated.
81. Service Employees International Union. (2007). Equity and inequity: How private equity buyouts hurt nursing home residents. Washington DC: Service Employees International Union.
82. Smith, C., Cowan, C., Heffler, S., & Catlin, A. (2006). National health spending in 2004: Recent slowdown led by prescription drug spending. Health Affairs (Millwood), 25(1), 186-196. (Pubitemid 43202441)
83. Spector, W. D., Selden, T. M., & Cohen, J. W. (1998). The impact of ownership type on nursing home outcomes. Health Economics, 7(7), 639-653. (Pubitemid 28521902)
84. Spillman, B. C., & Lubitz, J. (2002). New estimates of lifetime nursing home use: Have patterns of use changed? Medical Care, 40(10), 965-975.
85. Social Security Act of 1935, 42 (7) U.S.C. (2010).
86. Stevenson, D. G., & Grabowski, D. C. (2007). Nursing home divestiture and corporate restructuring. Washington DC: Department of Health and Human Services.
87. Stevenson, D. G., & Grabowski, D. C. (2008). Private equity investment and nursing home care: Is it a big deal? Health Affairs (Millwood), 27(5), 1399-1408.
88. Stevenson, D. G., & Studdert, D. M. (2003). The rise of nursing home litigation: Findings from a national survey of attorneys. Health Affairs, 22(2), 219-229. (Pubitemid 41399290)
89. Strömberg, P. (2007). The new demography of private equity: Swedish Institute for Financial Research. Retrieved from http://www.sifr.org/pdfs/ stromberg(demography2008).pdf (last accessed August 1, 2011).
90. Sundaramurthy, C., & Lewis, M. (2003). Control and collaboration: Paradoxes of governance. The Academy of Management Review, 28(3), 397-415. (Pubitemid 36881222)
91. The Lewin Group. (2000). Briefing chartbook on the effect of the Balanced Budget Act of 1997 and the Balanced Budget Refinement Act of 1999 on Medicare payments to skilled nursing facilities. Falls Church, VA: The Lewin Group.
92. Walters, D. (1993). Nursing homes' in transition: Health care reform, lifestyle trends driv internal, aesthetic changes in health care facilities. Arkansas Business.
93. Weech-Maldonado, R., Mor, V., & Adetokunbo, O. (2004). Nursing homes cost and quality: Is there a tradeoff? Expert Review of Pharmacoeconomics and Outcomes Research, 4(1).
94. Weech-Maldonado, R., Neff, G., & Mor, V. (2003a). Does quality of care lead to better financial performance? The case of the nursing home industry. Health Care Management Review, 28(3), 201-216. (Pubitemid 36935698)
95. Weech-Maldonado, R., Neff, G., & Mor, V. (2003b). The relationship between quality of care and financial performance in nursing homes. Journal of Health Care Finance, 29(3), 48-60. (Pubitemid 36284707)
96. Weisbrod, B. A. (1988). The nonprofit economy. Cambridge: Harvard University Press.
97. Wiener, J. M., Freiman, M. P., & Brown, D. (2007). Nursing Home Care Quality: Twenty Years After the Omnibus Budget Reconciliation Act of 1987: Kaiser Family Foundation
98. Williamson, O. (1984). Corporate governance. The Yale Law Journal, 93(7), 1197-1230.
99. Wunderlich, G. S., & Kohler, O. P. (2001). Improving the quality of long-term care. Washington DC: Institute of Medicine.