title: Malpractice paid losses and financial performance of nursing homes.
abstract: BACKGROUND
  Florida's nursing home industry has experienced significant financial pressure over the past decade. One of the primary reasons is the dramatic increase in litigation activity for nursing home providers claiming negligent care and abuse. Although anecdotal reports indicate a higher cost because of malpractice in nursing facilities, few studies have examined the extent of malpractice paid losses and their effect on the financial performance of nursing homes.
  
  
  OBJECTIVE
  The purpose of this study was to examine the impact of malpractice paid losses on the financial performance of nursing homes.
  
  
  METHODS
  Medicare Cost Report data and Online Survey, Certification, and Reporting data for Florida skilled nursing facilities over the 6-year period from 2001 to 2006 were used to calculate the malpractice paid losses and the financial performance indicators as well as the nursing home organizational and market factors. Descriptive analysis and multivariate regression analysis were used to examine the effect of paid loss on financial performance.
  
  
  RESULTS
  The paid loss for malpractice claims was strongly associated with financial performance. Nursing facilities with malpractice paid losses had consistently lower total margins over the study period. The threat of nursing home litigation may create an incentive for nursing homes to improve quality of care; however, large paid claims can also force nursing homes into a financial situation where the organization no longer has the resources to improve quality.
  
  
  CONCLUSIONS
  Nursing home managers must assess their malpractice litigation risk and identify tactics to mitigate these risks to better provide a safe and secure environment for the older persons. In addition, this research offers support for local, state, and federal policymakers to revisit the issue of malpractice litigation and the nursing home industry through its insight on the relationship of nursing home margins and litigation.
authors.affiliation: Health Administration Programs, College of Health, University of North Florida, Jacksonville, USA. mzhao@unf.edu
authors.forename: Mei
authors.initials: M
authors.lastname: Zhao
authors.forename: D Rob
authors.initials: DR
authors.lastname: Haley
authors.forename: Reid M
authors.initials: RM
authors.lastname: Oetjen
authors.forename: Henry J
authors.initials: HJ
authors.lastname: Carretta
mesh_terms: D000704:Analysis of Variance; D005431:Florida; D006302:Health Services Research; D006801:Humans; D007344:Insurance Claim Reporting; D016365:Liability, Legal; D008318:Malpractice / Q000191:economics*; D006278:Medicare / Q000706:statistics & numerical data; D009735:Nursing Homes / Q000191:economics* / Q000706:statistics & numerical data / Q000639:trends; D011787:Quality of Health Care; D012308:Risk Management; D012866:Skilled Nursing Facilities / Q000191:economics* / Q000706:statistics & numerical data / Q000639:trends; D014481:United States