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This study tests the contingency theory proposition that a nursing facility's strategy moderated by its management structure improves performance. Strategy is modeled in terms of degree of innovation; while structure is modeled as organic versus mechanistic. Payor mix, measured as the proportion of Medicaid residents, is used as an indicator of financial performance. Facilities in eight states comprise the sample (N = 308). The data are analyzed via hierarchical moderated regression analysis. The primary finding is that facilities that are both innovative and have an organic structure are more likely to have a lower proportion of Medicaid residents, an indicator of stronger financial performance.

This chapter reviews and integrates the empirical literature on the influence of organizational factors on hospital financial performance. Five categories of organizational characteristics that research has addressed are identified and examined as part of the review: ownership, governance, integration, management strategy, and quality. With some exceptions, our review reveals a general lack of consistency and conclusiveness across studies in each area. Exceptions were found in the areas of governance (e.g., physician participation and board processes) and integration (e.g., horizontal system centralization). Despite the lack of conclusive findings across studies, our review suggests substantial opportunities for future work, including opportunities for qualitative and exploratory work. Additional implications for theory and management are discussed.