Volume 43 | Number 3 | June 2008

Abstract List

Martin Kitchener, Janis O'Meara, Ab Brody, Hyang Yuol Lee, Charlene Harrington


To analyze corporate governance arrangements and quality and financial performance outcomes among large multi‐facility nursing home corporations (chains) that pursue stakeholder value (profit maximization) strategies.

Study Design

To establish a foundation of knowledge about the focal phenomenon and processes, we conducted an historical (1993–2005) case study of one of the largest chains (Sun Helathcare Inc.) that triangulated qualitative and quantitative data sources.

Data Sources

Two main sets of information were compared: (1) corporate sources including Sun's Security Exchange Commission (SEC) Form 10‐K annual reports, industry financial reports, and the business press; and (2) external sources including, legal documents, press reports, and publicly available California facility cost reports and quality data.

Principal Findings

Shareholder value was pursued at Sun through three inter‐linked strategies: (1) rapid growth through debt‐financed mergers; (2) labor cost constraint through low nurse staffing levels; and (3) a model of corporate governance that views sanctions for fraud and poor quality as a cost of business.


Study findings and evidence from other large nursing home chains underscore calls from the Institute of Medicine and other bodies for extended oversight of the corporate governance and performance of large nursing home chains.