An empirical examination of relative profitability in the nursing facility industry between ownership form and regionality in the state of Texas

The purpose of this research is to examine the relative profitability of the firm within the nursing facility industry in Texas. An examination is made of the variables expected to affect profitability and of importance to the design and implementation of regulatory policy. To facilitate this inquiry, specific questions addressed are: (1) Do differences in ownership form affect profitability (defined as operating income before fixed costs)? (2) What impact does regional location have on profitability? (3) Do patient case-mix and access to care by Medicaid patients differ between proprietary and non-profit firms and facilities located in urban versus rural regions, and what association exists between these variables and profitability? (4) Are economies of scale present in the nursing home industry? (5) Do nursing facilities operate in a competitive output market characterized by the inability of a single firm to exhibit influence over market price?^ Prior studies have principally employed a cost function to assess efficiency differences between classifications of nursing facilities. The inherent weakness in this approach is that it only considers technical efficiency. Not both technical and price efficiency which are the two components of overall economic efficiency. One firm is more technically efficient compared to another if it is able to produce a given quantity of output at the least possible costs. Price efficiency means that scarce resources are being directed towards their most valued use. Assuming similar prices in both input and output markets, differences in overall economic efficiency between firm classes are assessed through profitability, hence a profit function.^ Using the framework of the profit function, data from 1990 Medicaid Costs Reports for Texas, and the analytic technique of Ordinary Least Squares Regression, the findings of the study indicated (1) similar profitability between nursing facilities organized as for-profit versus non-profit and located in urban versus rural regions, (2) an inverse association between both payor-mix and patient case-mix with profitability, (3) strong evidence for the presence of scale economies, and (4) existence of a competitive market structure. The paper concludes with implications regarding reimbursement methodology and construction moratorium policies in Texas. ^

The social construction of infant mortality: From grassroots to medicalization

Infant mortality as a problematic situation has been recognized for some 130 years in one form or another. It has undergone various changes in its empirical dimensions relative to whom we study within the population, what we study--low birth-weight vs. pre-term births--and how we study it--whether demographically or medically. An analysis of the process by which the condition was raised by claims makers as an intolerable situation among America's urban residents reveals that demographic and medical data were sparse. Nonetheless, a judgement about the meaning and significance of the condition was made, and that interpretation led to the promulgation of systems to both document and address the condition as it has come to be defined.^ This investigation depicts the historical context and natural history of infant mortality as one of a number of social problems that came to be defined through the interplay among groups and individuals making claims and how their claims came to the public policy agenda as worthy of collective resources--who won, who lost and why. The process of social definition focuses attention on the claims makers and the ways they contrast the meaning, origins and remedies for this troubling condition. The historical context becomes the frame of reference for understanding the actions of the claims makers and the meaning and significance they attached to the problem.^ We purport that "context" provides a closer reality than disjoined "value free" accounts. Context provides the evidence for the definition, who participated in the process, why and by what means.^ The role of women in the definitional process reveals the differences in approaches utilized by the women of the settlement house reform movement and African-American women working at the grass-roots. Much of the work done by these two groups provided options to the problem's remedy; however, their differences paved the way to our current (principally medically-oriented) definition and its inherent limitations. ^