Strategic Orientation and Nursing Home Response to Public Reporting of Quality Measures: An Application of the Miles and Snow Typology

Nursing homes are an important component of the health care system, serving approximately 1.5 million elderly and disabled Americans in 16,323 Medicare and Medicaid certified nursing homes in 2003 (National Center for Health Statistics 2005). In view of the crucial role these facilities play in the care of the frail elderly, it is troubling that the nursing home industry has been persistently plagued by poor quality (Wheeler 2003; Winzelberg 2003). Typically, government reaction to quality concerns has taken a regulatory form, mandating compliance requirements that impact on virtually every aspect of nursing home operation. Yet, despite ongoing stringent reform efforts by the Centers for Medicare and Medicaid Services (CMS), the regulatory process is still viewed as inadequate. For example, a 1999 U.S. General Accounting Office study found that one-fourth of the nation's nursing homes had serious deficiencies that caused actual harm to residents or placed them at risk of death or serious injury and 40 percent had serious repeat deficiencies (Johnson et al. 2004). Consequently, the effectiveness of sole reliance on regulatory approaches has come under closer scrutiny. The Bush Administration has consistently expressed its preference for market solutions over regulation with respect to quality of nursing home care (U.S. Department of Health and Human Services 2000). Consistent with this market-based approach, in November 2002, CMS launched the Nursing Home Quality Initiative, introducing quality measures to supplement the information about deficiency citations and staffing found on the Nursing Home Compare website. These quality measures are intended to provide objective information that can be used as one indication of how well the nursing home manages various aspects of care provided to residents. These measures were widely publicized by CMS when first published through full-page advertisements in all the major newspapers in the country. Consumer interest has been great and Nursing Home Compare has become one of the most frequently visited sites on Medicare.com (National Quality Forum 2004). A description of the quality measures that were posted at the time of this study can be found in Appendix A (available online). The publication of these quality measures represents a major change in the operating environment that could influence the nursing home's ability to attract and retain residents. Thus, we would expect that nursing homes would have the incentive to address performance expectations potentially influenced by the availability of public reporting. Although whether and to what extent public reporting was responsible remains an open question, some of the performance areas covered by the quality reports exhibited improvement, and in some instances, the improvement was quite substantial. For example, pain experienced by long-term stay residents has declined by about 38 percent since the first publication of this quality measure. Other measures, however, show no discernable trend toward improvement, suggesting that the impact of public reporting, to the extent it is a factor in these trends, is not uniform (Dembner and Debman 2004; Zinn et al. 2005). Thus, nursing homes appear to be selectively choosing whether and how to respond to public disclosure of their performance with respect to quality. These choices may be conditioned on a number of factors. For example, performance on quality measures has been shown to vary with organizational characteristics, such as size, ownership status, chain affiliation, occupancy rate, and whether a facility is free standing or hospital based (Zinn et al. 2005). Prior decisions with respect to strategic positioning and resource allocation may also determine whether and how facilities respond to quality measure publication. In keeping with the principal of equifinality (Doty, Glick, and Huber 1993) more than one strategy can be successful in a given environment, providing the firm acts consistently with that strategy. This is the premise behind configurational approaches that typically employ typologies that capture major strategic commonalities (Thomas and Ramaswamy 1996). One of the better known examples of the configurative approach, the Miles and Snow typology, has been the subject of extensive theoretical and empirical examination (Hambrick 1983; McDaniel and Kolari 1987; Shortell and Zajac 1990; Zahria and Pierce 1990). Researchers have found strong and consistent support for the typology in a wide array of settings, including hospitals, health maintenance organizations, colleges, banks, life insurance companies, and manufacturing industries (Hambrick 2003). In evaluating its reliability and validity, Shortell and Zajac (1990) concluded that “researchers can use this typology with increased confidence in future work on organizations and their strategies” (p. 830). However, despite its potential relevance for understanding nursing home resource allocation decisions affecting the quality of care, there has been virtually no application of this typology in the analysis of nursing home strategic behavior (Davis, Brannon, and Zinn 2001; Castle 2003). This study contributes to the knowledge base in this area by assessing whether differences in strategic orientation, as identified by the Miles and Snow typology, are associated with differences in nursing home response to the publication of quality measures on the Nursing Home Compare website.