The effect of political control on financial performance, structure, and outcomes of US nursing homes

OBJECTIVE: To evaluate the effect of partisan political control on financial performance, structure, and outcomes of for‐profit and not‐for‐profit US nursing homes. DATA SOURCES/STUDY SETTING: Nineteen‐year panel (1996‐2014) of state election outcomes, financial performance data from nursing home cost reports, operational and aggregate resident characteristics from OSCAR of 13 737 nursing homes. STUDY DESIGN: A linear panel model was estimated to identify the effect of Democratic and Republican political control on next year's outcomes. Nursing home outcomes were defined as yearly facility revenues, expenses, and profits; the number of Medicaid, Medicare, and private‐pay residents; staffing levels; and selected resident outcomes. PRINCIPAL FINDINGS: Democratic political control leads to an increase in financial flows to for‐profit nursing homes, boosting profits without producing observable improvements in resident outcomes. Republican political control leads to lower revenues and profits of for‐profit nursing homes. A shift from Medicaid to more profitable private‐pay residents following Republican political control is observed for all nursing homes. Financial performance of not‐for‐profit nursing homes is not significantly affected by changes in political control. CONCLUSION: Political control of the two legislative chambers—but not of the governorship—shapes the structure of the nursing home industry as seen in provider behavior.