Can teams in nursing homes save costs?

Teams are often considered a preferred approach for organizing workforce in long-term-care. Empirical evidence on their effectiveness is limited. The objective of this study was to determine empirically the costs of organizing frontline workers in nursing homes in formal and in self managed teams.

The study combined data from a 2006 mailed survey of direct-care workers in New York State nursing homes (e.g. nurses aides) about whether or not they are organized in direct-care teams and the type of team (formal or self-managed) and expenditures data from the 2006 Medicaid cost reports of these nursing homes. The final sample consisted of 140 (86%) nursing homes and 6,498 (88%) responding frontline workers. Responders were similar to the universe of nursing homes in size, occupancy, expenditures, and deficiency citations, but were more likely to be non-profit.

We estimated a hybrid cost function. The dependent variable was log of annual variable costs. Independent variables included outputs (such as case mix adjusted days), beds, wages, ownership, and two team variables: percent of direct-care workers who reported being in a formal team and percent reporting being in a self-managed team. All team variables were introduced into the model as linear, squared and cubed terms to allow for non-linear relationships with costs.

The cost function was highly significant (p<0.0000) with R2 of 97%. Percent workforce in formal teams was significantly associated with cost savings (p=0.0036) while self managed teams were not (p=0.4258).

This study suggests that nursing homes can achieve costs savings by establishing formal teams.