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OBJECTIVE: This study sought to identify risk factors associated with the prescription and use of benzodiazepines in nursing homes and to assess the prevalence and determinants of demand for benzodiazepines among nursing home residents. METHODS: Data were available for 2,060 residents who had participated in a previous study of use of medications in 18 randomly selected nursing homes in Wisconsin between 1986 and 1989. Data sources included nursing home and pharmacy records; nurses' assessments of residents' behavior, pain, sleep, and demand for medication; and researchers' observations of resident requests for medication. Measures of benzodiazepine use included benzodiazepine prescriptions, prevalence and extent of as-needed drug use, and chronic use as defined by Health Care Financing Administration guidelines. RESULTS: A quarter of the residents received prescriptions for benzodiazepines. Of these, 71 percent received prescriptions to aid sleep or to be taken at bedtime; 32 percent used benzodiazepines for a longer period than recommended; and 26 percent requested medication. Logistic regression analysis showed that residents with depression, pain, or sleep problems were more likely to have received benzodiazepines and to have requested medication. Chronic use was significantly higher among residents with depression, sleep problems, or multiple benzodiazepine regimens and among those who requested medication. Demand and sleep problems also were associated with higher rates of any as-needed use and with higher numbers of as-needed doses used. CONCLUSIONS: Efforts to improve benzodiazepine use in nursing homes must address the need for better assessment and management of depression, sleep, pain, and residents' demand for these medications.