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Be a PEST: The Social, Political, Economic and Technological Forces that Influence Nursing Home Administration

Published February 19, 2008 2:20 PM by Brian Garavaglia

Nursing home administration entails being aware of the macro social, economic and political forces that shape the daily life of nursing home administration. This is not an easy task since these forces are constantly changing and influencing the nursing home environment on a daily basis. An administrator has to be aware not only of the changes in the internal environment of the facility, but also the changes that exist outside of the facility.


One way to evaluate these changes regularly is to use the PEST analysis or sometimes referred to as the STEP analysis. The PEST analysis is an acronym for political, economic, social and technological changes that need to be evaluated so that the administrator can understand how these external forces may impact their nursing home environment.   


The political environment outside of the nursing home is constantly changing. As any administrator knows, the news briefs that they receive from their state agency as well as the Centers for Medicare and Medicaid create a substantial amount of paperwork that needs to be read, addressed and acted on.  However, other political areas that may not be directly related to the nursing home industry may also formidably impact their environment.


Political candidates elected to offices, state and federal budget deficits, political petitioning and logrolling, to name just a few have powerful effects that at first blush may not be directly related to nursing home care, yet nevertheless have a powerful impact on the nursing home environment. Furthermore, political agendas, both overt and hidden, have powerful effects in shaping the lives of those that reside in nursing care facilities as well as those who are employed by these facilities.  


The economic factors need to be examined as well. Again, it is not only the direct economic factors aimed at the long-term care industry that influence this environment. One must also examine the indirect economic factors that are prominent in the state and national landscape as well. Not only are the microeconomic factors involved in the long-term care industry something that needs to be examined regularly but also the impact of other macroeconomic factors in the larger state and national environment have to be given close scrutiny, too.


Because large-scale economic decisions made on the state or national level do not typically just influence a particular part of the population that they were initially intended for, the reverberation of these economic decisions may affect other areas as well, such as nursing facilities. Economists call this “externalities,” or the impact that economic decisions have on other, often unintended, areas. Therefore, when fiscal or monetary policies change at the federal level, and tax rates or interest rates are impacted, or reallocation of the state budget is established, the general consumer and larger businesses are not the only area that is economically impacted, but the impact can also be felt in the long-term care industry as well. 


The social landscape has a powerful impact that also needs to be considered.  Social forces affecting long-term care can come from advocates for change, studies that have come to demonstrate areas that need to be addressed, demographic factors that place the long-term care environment under scrutiny, geographic factors that may influence nursing home populations as well as other sociological phenomenon that are relevant and need to be given notice.


The Institute of Medicine’s 1986 report was such a major social force that drove the changes in the modern nursing home industry, leading to the passage of the OBRA regulations that have had a wide-scale influence on the current state and federal regulatory environment for nursing care facilities. Social movements and social forces do not always have to be so prominent, but can also be more subtle. The current nursing shortage, coupled with the shortage of nursing instructors, is and will be a significant social force that needs to be grappled with currently, and in the years to come. Moreover, the current aversion for many physicians to specialize in geriatrics and long-term care, even though the population of older adults is increasing and will continue to increase, is another formidable challenge that long-term care facilities and the older adult population in general will have to address in the years ahead.        


Finally, possibly no other force is having a profound impact on health care in general, and the long-term care environment in particular, as is technology and technological innovation. Franz Boas, the famous anthropologist, stated that no other force changes culture to any greater degree than the technological innovations found in cultures. In years past the nursing care environment was prominently viewed as a low-technology, “rest home” environment.  It was an environment predicated on an almost exclusive labor-intensive environment directed toward providing care for the daily living of residents in these environments.


Today, however, the nursing care environment has taken on the role of a more technologically advanced environment, often being viewed as a post-acute continuation for hospital stays. Rehabilitation equipment that involves short-wave diathermy, electrical stimulation, and other rehabilitative equipment that mimics that found in hospital environments is frequently also found as well in nursing care facilities.  Furthermore, advanced pulmonary equipment, dialysis areas, and neurological testing and rehabilitation are also found in these environments as well. This is just to name a few of the technologically sophisticated practices that the administrator needs to be aware, and often needs to address, daily.   


It becomes a very difficult task to be aware of all the changes that are happening all the time.  Furthermore, it is unrealistic to believe that any one administrator will know every change that is happening and that will impact their nursing home environment. At a time where administrators have enough on their plate managing the internal factors within their nursing care facility, is it realistic to have them also be aware of the external environment as well? The answer to this is that it is not only realistic, but mandatory. Nursing home administration means not just managing the internal confines of the building, but managing and anticipating the trends and factors on the outside that will influence their building as well. 


Again, to reiterate, no nursing home administrator can possible know and anticipate all of the factors on the political, economic, social and technological levels that will influence their daily administrative lives.  However, using the PEST analysis regularly will allow them to understand some of these forces and how they will impact many administrative decisions that they need to make as part of their daily administrative duties.       


What being a PEST, as stated in the title of this article, allows administrators to do is take a regular role in managing the forces outside of your building. Many will say that there is nothing you can do about what happens outside of your building on the community, state or national level. Although there may exist some kernel of truth to the previous statement, holding this idea exclusively it nothing more than “managerial fatalism.” As an administrator you cannot control everything that takes place outside of your facility. However, there are many things that you can influence that may be forestalled or minimized by the proper environmental scanning and the information obtained through a PEST analysis. 


Even things that may not be amenable to change through administrative intervention, if properly acknowledged and known about in advance, can be managed appropriately to avoid more deleterious effects on the nursing care facility environment. Much administration, especially in health care and long-term care, is “anticipatory administration,” which good administrators engage in daily. It allows them to use the information that they have obtained from a scan of their outside environment and put relevant procedures in place to address any issues and obstacles that they may anticipate in the future. 


Therefore, pay attention not only to the internal environment, but to what is happening outside of the walls of your building.  Be a PEST! 


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About this Blog

    Brian Garavaglia, PhD
    Occupation: Long-term care administrator
    Setting: Sterling Heights, Mich.
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