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Nursing home spending, staffing, and turnover

Kash, Bita A.; Castle, Nicholas G.; Phillips, Charles D.

Health Care Management Review:
doi: 10.1097/01.HMR.0000281625.20740.13

Background: Recent work on nursing home staffing and turnover has stressed the importance of ownership and resources. However, few studies have examined spending behaviors, which might also influence staffing levels and staff turnover rates.

Purpose: This study investigates whether spending behaviors measured by financial ratios are associated with staffing levels and staff turnover in nursing homes.

Methodology: We analyzed cross-sectional data from 1,014 Texas homes. Data were from the 2002 Texas Nursing Facility Medicaid Cost Report and the 2003 Area Resource File. First, we examined differences in financial ratios by ownership type. Next, the effect of 10 financial ratios on staffing levels and turnover rates for registered nurses, licensed vocational nurses, and certified nursing assistants was examined using robust regression models.

Findings: Descriptive data indicated that expense ratios related to resident care activities and staff development were significantly higher among not-for-profit than for-profit homes. Higher profits were associated with lower staffing levels, but not higher turnover rates. Administrative expenses (a measure of management capacity) had a negative impact both on staffing levels and staff turnover for licensed vocational nurses and certified nursing assistants, but they did not affect registered nurse staffing. Employee benefit expenses exhibited a positive impact on registered nurse and licensed vocational nurse staffing levels. The addition of information on financial ratios to models predicting staffing indicators reduced the effect of ownership on these indicators.

Practice Implications: Solutions to the staffing and turnover problem should focus on more effective management practices. Certain levels of administrative and staff benefit expenses may be necessary to improve professional staff recruitment and reduce both staffing and turnover costs. Differences in these financial ratios may partially explain the role played by ownership in determining staffing levels and turnover.

Author Information

Bita A. Kash, PhD, MBA, FACHE, is Assistant Professor, Department of Health Policy and Management, School of Rural Public Health, Texas A&M University Health Science Center, College Station. E-mail:

Nicholas G. Castle, PhD, is Associate Professor, Department of Health Policy and Management, Graduate School of Public Health, University of Pittsburgh, Pennsylvania. E-mail:

Charles D. Phillips, PhD, MPH, is Professor, Department of Health Policy and Management, School of Rural Public Health, Texas A&M University Health Science Center, College Station. E-mail:

This project was supported by grant number 1 R36 HS016229-01 from the Agency for Healthcare Research and Quality (AHRQ). Its contents are solely the responsibility of the authors and do not necessarily represent the official views of AHRQ.

© 2007 Lippincott Williams & Wilkins, Inc.