Cost Implications of Organizing Nursing Home Workforce in Teams

Interdisciplinary and multidisciplinary teams are often viewed as a more effective way to deliver health care (Halstead 1976; Mickan and Rodger 2000; Lawrence 2002; Lemieux-Charles and McGuire 2006;), especially to patients requiring complex services, such as those in need of chronic care (Wagner et al. 2001; Shortell et al. 2004; Wagner 2004;) or in long-term care settings (Heinemann and Zeiss 2002). Such teams have been credited with better patient outcomes, both in acute (Shortell et al. 1994; Gittell et al. 2000;) and long-term care programs (Mukamel et al. 2006), and have been associated with lower error rates and provision of higher quality patient care (Shortell et al. 1994; Edmondson 1996; Rafferty, Ball, and Aiken 2001; West et al. 2002; Alexander et al. 2005; Proudfoot et al. 2007;). Work environments organized around teams have also been found to exhibit better working conditions, including reduced staff turnover and absenteeism, increased staff motivation, and reduced staff conflict (Mitchell et al. 1996; Gittell et al. 2000; Firth-Cozens 2001; Pearson et al. 2006; Proudfoot et al. 2007;). In nursing homes, interdisciplinary care planning teams are the norm. They are mandated by the clinical guidelines for the Resident Assessment Instrument/Minimum Data Set (RAI/MDS) process, which is required by the Centers for Medicare and Medicaid Services (CMS) of the >90 percent of U.S. nursing homes that are Medicare or Medicaid certified (Forbes-Thompson et al. 2006). It is also a condition of accreditation by the Joint Commission on Accreditation of Healthcare Organizations (JCOAH 2004; Dellefield 2006;). These teams develop residents' care plans, but they do not provide ongoing daily care. Nursing home staff providing daily care to nursing home residents may or may not be organized in teams. Studies suggest that such teams may lead to better resident outcomes. Rantz et al. (2004) studied 92 Missouri nursing homes and attributed better patient outcomes to team and group processes in the provision of daily care. Yeatts et al. (2004) and Yeatts and Cready (2007) studied five facilities and based on qualitative and quantitative data show that when CNAs are organized in teams there was a modest positive effect on CNAs' empowerment and performance and on residents' care. Scott-Cawiezell et al. (2005) in a purposeful sample of 32 nursing homes attributed better care and resident morale to teamwork based on key informant interviews. Berlowitz et al. (2003) have shown that greater implementation of quality improvement efforts in nursing homes was associated with emphasis on innovation and teamwork. Others have also found an association between organizational processes related to teamwork, such as leadership, communication, and interaction among staff, and better resident outcomes (Sheridan, White, and Fairchild 1992; Anderson, Issel, and McDaniel Jr 2003; Rantz et al. 2003; Scott-Cawiezell et al. 2003;). While the nursing home literature suggests that teamwork may be associated with better quality of care, much less is known about the cost consequences of teamwork. Burl and Bonner (1991), Burl, Bonner, and Rao (1994), Burl et al. (1998), and Aigner, Drew, and Phipps (2004) found that teams of nurse practitioners and physicians are more cost effective than physicians alone in nursing homes. Vu et al. (2007) provided evidence that specialized teams focused on wound care provide cost-effective care. Rantz et al. (2004) examined the relationship between costs and resident outcomes in 92 nursing homes in Missouri, and while they did not offer direct evidence, they speculated that there might be efficiencies gained from the team approach adopted by homes that experience better outcomes. None of these studies examined the cost implications of employing multidisciplinary teams to provide the full spectrum of daily care in nursing homes. In the study we report here we take advantage of data that were collected for a study of a large number of nursing homes in New York State (NYS) regarding the organization of their direct care workers into formal and self-managed teams. We merge this information with expenditures data reported in their Medicaid cost reports and use regression techniques to estimate cost functions. We adapt the basic cost function derived from economic principles to include variables describing the penetration of formal and self-managed teams in each nursing home, and thus are able to estimate the relationship between teams and costs.