Managerial responses to Medicaid prospective payment in the nursing home sector

The United States must soon address long-term care policy. Policymakers have sought cost containment through reimbursement policies that contain incentives for efficiency. Nursing facility administrators were surveyed twice following a significant change in Maine's Medicaid reimbursement policy to determine the effects of the change on their managerial practices. The administrators responded to some of the policy changes as profit maximizers, including instituting cost controls and benefiting from incentives. In other areas, such as staffing, staff pay, and accepting heavy care patients, the administrators did not seem to behave entirely as expected. Insights from organizational theory are useful for explaining some of the other behaviors. As long-term care reform is undertaken, a policy framework should include aspects of the internal environment of nursing facilities, such as administrator goals and organizational structure and mission.