Beyond numbers: a holistic exploration of nursing home staffing patterns and financial performance in the Patient-Driven Payment Model landscape

Background: Medicare and Medicaid payments significantly influence nursing homes’ financial health, affecting their overall revenue. The introduction of the Patient-Driven Payment Model (PDPM) in 2019 may incentivize nursing homes to adapt strategically. This study, rooted in contingency theory, examines how staffing changes, particularly in nursing and therapy, affect nursing homes’ financial performance post-PDPM. Methods: The study utilized secondary data from various sources, including Centers for Medicare and Medicaid Services (CMS) Medicare cost reports, Brown University’s Long Term Care Focus (LTCFocus), CMS Payroll-Based Journal, CMS Care Compare, Area Health Resource File, Provider Relief Fund distribution data, and CDC’s nursing home (NH) coronavirus disease 2019 (COVID-19) public file. Financial performance, operationalized by operating margin, is the dependent variable, while the independent variable, PDPM is operationalized as pre-PDPM [2018] and post-PDPM [2020–2022]. Staffing intensity, measured by reported therapy and clinical staffing hours per resident per day, serves as the moderator. Organizational, market-level, COVID-19, and year fixed effects variables are used as controls. We modeled the data using facility fixed effect regression. Results: Our study results indicate that an increase of one hour registered nurse (RN) per resident day, licensed practical nurse (LPN) per resident day, and certified nursing assistant (CNA) per resident day post-PDPM is associated with an RN −0.04%, LPN −0.03% and CNA −0.01% decrease in operating margin (P<0.001). High Medicare facilities experienced a higher increase in operating margin by 2.1% compared to a decline in low Medicare facilities by −0.90%. Conclusions: The findings highlight the complex interplay between staffing patterns, PDPM, and financial performance in nursing homes.