High nursing home administrator turnover is linked to lower operating margins, according to the results of a new study. Compared to facilities with no turnover, facilities with one administrator turnover saw a year-over-year 1.14% decrease in margins, while facilities with two or more turnovers saw a 2.25% decrease.
Policymakers should take this concern seriously and consider interventions to help long-term care facilities with administrator retention, or support the industry in other ways, such as providing long-requested Medicaid reimbursement rate increases, the researchers recommended.
While past studies have focused on how administrator turnover affects nursing home care quality, this is the first recent study to show how turnover relates to facilities’ finances directly, the authors said.
Those financial impacts flow from the complications that high turnover adds to facilities’ processes over time.
“Frequent leadership turnover can inhibit long-term planning processes, as it takes time for new administrators to familiarize themselves with the organization and to initiate strategic change,” the researchers wrote. “Nursing homes with higher turnover may struggle to manage environmental and regulatory complexities, resulting in poorer overall performance, including negative financial outcomes.”
The study is not understating the importance of consistent leadership, according to Robert Lane, president and CEO of the American College of Health Care Administrators.
“From both experience and observation, I would fully concur that consistent leadership in the administrator role can have a direct impact on operations,” Lane told McKnight’s Friday. “When the culture of the organization is one where all stakeholders understand the expectations, goals and where the organization is headed, not only will the operating margin improve, but turnover of staff is reduced, community support and perception is increased, regulatory compliance is improved and, ultimately, care is improved.”
The research, published Thursday in the journal Risk Management and Healthcare Policy, was led by Rohit Pradhan, PhD, associate professor at Texas State University. The study notes that administrators face many of the same challenges as others in the long-term care workforce, including burnout from a high-stress work environment.
This has led to a turnover rate of around 40% that has stayed consistent since the 90s. The Centers for Medicare and Medicaid Services, however, only began publishing administrator turnover in 2022.
A delicate balance
High administrator turnover has also been linked with lower care quality. The researchers noted that their results drive home the importance of retaining administrators both for care quality and financial reasons.
“As demand for [long-term care] continues to grow with the aging of the US population, the challenge of attracting and retaining healthcare managers will only be more imperative,” the investigators wrote. “Recognizing the positive association between reduced [administrator] turnover and financial performance, it becomes apparent that nursing homes have the opportunity to initiate a virtuous cycle of improved retention, financial stability, and the overall quality of care provided to residents.”
Nursing homes that had no administrator turnover during the study were more likely to be small, with higher staffing levels and fewer residents on Medicaid. The researchers noted that many facilities are not in this situation and are caught between the negative impacts of letting turnover continue unchecked and the increased costs necessary to increase retention.
“[Administrators] may be an essential component towards improved financial performance,” they wrote, “but facilities already operate in a financially delicate environment. Despite their best intentions, it may be impossible for nursing homes to financially package NHAs as an attractive career option.”
Despite the costs and difficulties involved, investing in retaining quality administrators will continue to be a vital part of maintaining strong skilled nursing facilities, according to Lane.
“Owners and operators of long-term care organizations would be well-served to invest in the ongoing professional development of their administrators, because leadership truly does make all the difference for the overall health of the facility,” he said.
