Chapter 9 The Performance Impact of Nursing Home Innovation: A Contingency Perspective

In this chapter, we investigate whether innovation, as measured by an aggregate weighted innovation score, impacts on nursing home performance. We employ multiple measures of performance, including occupancy rate, payer mix, and the number of deficiencies cited on the annual Medicare/Medicaid recertification survey. Arguing from a contingency perspective, we hypothesize that the performance of nursing homes that engage in minimal innovation will not be significantly different from those that do not innovate at all. However, those that engage in more extensive innovation will have superior performance. Using Online Survey, Certification, and Reporting data from 1997 to 2002, we conducted a series of logit regressions, controlling for organizational and market characteristics that could influence nursing home performance. The results of these analyses support our hypotheses. From a theoretical perspective, this evidence is consistent with contingency theory arguments that organizations that are not responsive to a changing environment will experience declining performance. From a managerial perspective, these results support the importance of the entrepreneurial spirit in the nursing home industry.