Effects of institutional pressure and dynamic capabilities on operational performance of U.S. long-term healthcare providers

Long Term Care facilities are a highly regulated industry due to funding sources being subject to Medicare and Medicaid reimbursement. The demand for nursing homes is increasing significantly with anticipation of the Baby Boomers reaching age 65. Most research studies of the long-term care industry are focused on quality improvement and reduced deficiencies. This study provides a different view of how strategic capabilities (adaptive, absorptive, and innovative) and Baldrige Health Care Criteria affect financial returns, operational efficiency, and quality for long-term care providers. The findings indicate that facilities' capabilities are associated with Baldrige criteria and performance. However, the relationship between organizational adaptive capability and operational efficiency is one of the significant negative links for this research. Thus, when a facility tries to be more adaptive to its market, the facility will be required to increase effort on its operations, thereby reducing its efficiency. Moreover, the findings between Baldrige Healthcare Criteria and outcome performance provide a confirming message to skilled nursing facility management. As long as the facilities follow the proscribed government mandates and regulation requirements which are aligned with Baldrige criteria, the facility can achieve better quality ratings and higher financial returns.