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Staffing levels and turnover are influenced by nursing home expenditure patterns

Direct care staffing levels and staff turnover rates in nursing homes are widely used as measures of care quality. Much previous research has found that the type of nursing home ownership (for-profit or not-for-profit) had influenced staffing levels and turnover, with not-for-profit nursing homes having higher staffing levels and lower turnover. A new study reveals that nursing home expenditure patterns also influence staffing levels and turnover.

Bita A. Kash, Ph.D., M.B.A., of Texas A & M University, and colleagues examined the relationship between 10 financial ratios (6 activity expense ratios, 2 growth and risk ratios, and 2 profitability ratios) and staffing levels and turnover in 1,018 Texas nursing homes. The researchers measured expenditures by the ratio of a given type of expenditure to net resident revenues. They found that higher administrative expenses (implying more management capacity) can reduce both staff turnover and staffing levels.

Staff training and benefit expenses did not affect staff turnover, but higher staff benefit expenses were associated with higher levels of professional staff, that is, registered nurses (RNs) and licensed vocational nurses (LVNs). Higher profit margins were associated with reduced staffing levels. However, when the 10 financial ratios were factored in, the relationship between for-profit or not-for-profit ownership and staffing indicators was weakened. Depending on the particular staffing indicator, administrative expenses, activity expenses, operating profit margins, and benefit expenses all played a greater role than the type of ownership.

Nursing home administrators could use the different expense and profitability ratios identified in this study as predictors of staffing levels and staff turnover. For example, higher administrative expenditures produced lower LVN and certified nursing assistant (CNA) turnover and staffing levels without affecting RN staffing levels. Because higher RN staffing levels are associated with better quality, this implies that more management capacity may be associated with more cost-effective care, note the authors. They suggest that the financial ratio approach used in their study may eventually provide possibilities for practice guidelines and budgeting standards focused on improving staffing levels and reducing turnover in nursing homes.

The study was supported by the Agency for Healthcare Research and Quality (HS16229).

See "Nursing home spending, staffing, and turnover" by Dr. Kash, Nicholas G. Castle, Ph.D., and Charles D. Phillips, Ph.D., M.P.H., in the July-September 2007 issue of Health Care Management Review 32(3), 253-262.

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