| Abstract: | This study investigates the determinants of local governments'decisions to privatize public nursing homes. According to theOnline Survey, Certification, and Reporting (OSCAR) 2004 data,more than 100 counties in the United States have recently divestedtheir nursing facilities through change of ownership to nonprofitor for profit or through termination. The theoretical modelused in this study proposes four broad categories of antecedentsof the privatization decision: market failure, government failure,and monetary and institutional factors. County governments areviewed as rational actors, affected by a range of external andinternal pressures and striving to maximize the attainment oftheir complex missions. The data used in this study come fromthe OSCAR 2004 file and several other sources. Using logisticregression analysis, the baseline (1998–2000) measuresof all independent variables for 622 county-owned homes wereregressed on the dummy dependent variable, indicating whetherthe nursing home was privatized by 2003 or not. Quantitativeanalysis was supplemented with two exploratory case studies.Local market competition, occupancy level, condition of thephysical plant, staffing, the prevalence of privatization inthe neighboring counties, and the proportion of elderly in thecounty were found to be significantly associated with the likelihoodof nursing home divestment. The analysis supports the idea ofa complex framework of managerial decision making: countiesappear to be smart sellers by divesting when occupancy declines,when the physical environment deteriorates, and when privatemarkets are relatively more competitive. They are also foundto be smart owners by sustaining public ownership of thrivingpublic facilities surrounded by failing private markets. |
