Organizational Culture and Nursing Home Financial Performance: The Case of High Medicaid Nursing Ho

Abstract

This paper investigates the relationship between organizational culture and financial performance in high-Medicaid Nursing Homes, nursing homes that serve a high proportion of Medicaid residents. As high-Medicaid Nursing Homes operate in resource-constrained environments, they usually have lower staffing and occupancy, higher minority resident mix, and worse quality of care. A specific organizational culture, assessed by the Organizational Culture Assessment Instrument, can be a strategy those nursing homes employ to secure resources necessary to survive. This instrument helps identify organizational culture types: adhocracy, clan, market, and hierarchically oriented. We tested whether a specific type of organizational culture was associated with higher financial performance, measured by an operating margin. Survey data of 348 nursing home administrators were collected in 2017-2018. We found that the market culture was positively associated with a higher operating margin. On the other hand, there was a negative relationship between a hierarchically oriented culture and financial performance. These findings can help nursing home administrators improve their financial performance through the adoption of certain organizational cultures.