Organizational Culture and High Medicaid Nursing Homes Financial Performance

Background and Objectives: This paper investigates the relationship between organizational culture and financial performance in under-resourced nursing homes (85% or higher Medicaid residents).

Research Design and Methods: We tested whether the type of organizational culture (clan, adhocracy, market, and hierarchical) was associated with higher financial performance, measured by the operating margin. Survey data of 341 nursing home administrators were collected in 2017–2018 and merged with secondary datasets with facility and market characteristics. We used multiple regression analysis to test our hypotheses.

Results: We found that a market culture was positively associated with higher operating margin. On the other hand, having a clan, hierarchical, or non-dominant culture was associated with lower financial performance, compared to a market culture.

Discussion and Implications: Ensuring the financial viability of high-Medicaid nursing homes is important since they provide care to low-income residents and a high proportion of racial/ethnic minorities. Our findings suggest that having a market culture with an external orientation may be associated with better financial performance among these nursing homes.