Nursing Homes

Nursing facilities, commonly called nursing homes, serve a small percentage of older adults. These facilities continue to be in the public-policy spotlight because of efforts to redefine their position in the long-term care system and because of ongoing efforts to enhance the quality of care they provide to their residents. Nursing facilities are defined here as facilities with three or more beds that routinely provide twenty-four-hour nursing care services to sick or disabled individuals; they may be certified by Medicare or Medicaid or licensed by the state as a nursing facility, and they may be freestanding or part of a larger facility. There are four major characteristics of nursing facilities: (1) facility characteristics, (2) resident characteristics, (3) financial characteristics, and (4) administration and staffing characteristics.

Facility characteristics

A nursing facility (NF) is a facility that has met Medicaid certification requirements. A skilled nursing facility (SNF) is one that has met Medicare certification requirements. Facilities that are part of hospitals and intermediate-care facilities for the mentally retarded (ICF-MR) are not included in this discussion.

In 1998, there were about 17,000 nursing facilities containing approximately 1.8 million beds and 1.6 million elderly and disabled residents in the United States. Six states—California, Illinois, New York, Ohio, Pennsylvania, and Texas—accounted for 37 percent of all nursing-facility beds (over 640,000 beds). Texas had the most nursing-facility beds (122,365). The total number of nursing facilities (and the number of licensed beds) fell slightly between 1998 and 1999. Nationwide, there were 49.7 beds per 1,000 persons age sixty-five or older in 1999, a drop of 4.2 percent from 51.9 beds in 1998. The average size of a nursing facility in 1997 was 107 beds. For the thirty-three largest chain-owned facilities, the average number of beds per facility in 1999 was 109, which was a 5.1 percent drop from the average of 115 beds in 1998.

Data from the 1997 National Nursing Home Survey revealed that approximately 77 percent of all facilities and 84 percent of all beds are certified by both Medicare and Medicaid. In 1997 the occupancy rate in all nursing facilities was about 88 percent, which is 5 to 10 percent, less than during the early 1990s. According to Manton and Gu, "there was a large absolute decline (415,000 persons) in the institutional population 1994 to 1999" (p. 3). Over 66 percent of the facilities are located in the Midwest and southern regions of the nation, and about 61 percent of the facilities are located in metropolitan areas.

The majority of nursing-facility beds in 1997 were owned by for-profit organizations (67 percent), followed by not-for-profit organizations (26.1 percent), with government-owned homes accounting for about 8 percent of all facilities. The consolidation of the nursing-home industry is reflected by the fact that between 1998 and 1999 the number of licensed beds in the nation's thirty-three largest nursing facility chains increased by almost 2 percent. These chains owned approximately 27 percent of all beds nationwide in 2000 with about 56 percent of all nursing homes in the United States being part of a chain.

A significant change in nursing facilities has been the addition of what has been called special care or subacute care units within nursing facilities. These units "have emerged in an effort to meet the needs of subgroups of residents such as those with Alzheimer's disease or with relatively short-term post-acute needs" (Wunderlich and Kohler, p. 22). The number of dementia-specific special care units has also grown and "as of 1996, nearly one in four nursing homes had at least one organized dementia care unit, wing, or program" (NIA, p. 41). As a result of this growth, the Centers for Medicare and Medicaid Services (CMS) now track information on special units for residents with Alzheimer's disease. In addition, the Alzheimer's Association has developed specific guidelines for special care units (SCUs) and the Joint Commission of Accreditation of Healthcare Organizations has developed SCU standards. These types of units continue to be viewed by operators, staff, and family members as a better alternative to traditional nursing-facility care. Because of the lack of a standard definition for SCUs, the National Institute on Aging has supported a number of projects to examine the nature and effectiveness of these units. One of the significant outcomes of this research has been the development and testing of a method for classifying SCUs, which has allowed for a more effective comparison of the care provided across different types of SCUs.

Resident characteristics

One established fact about older adults is that in general they are living longer and healthier lives. There has also been an increasing availability of alternatives to nursing facilities (e.g., assisted living) and an increased use of community-based services (e.g., home health care), with the result that the profile of the "typical" nursing facility resident has changed in significant ways since 1985. There are now three older women for every older man in nursing facilities. This ratio has not changed since 1985, but the percentage of white residents declined from 93 percent in 1985 to 89 percent in 1997. It is very common for women to be widowed at the time of admission. Persons sixty-five years and older using a nursing facility in 1997 had an average age at admission of 82.6 compared to 81.1 in 1985. A common approach used by health care providers to measure functional ability in older adults is activities of daily living (ADLs). This method consists of measuring changes in the person's ability to perform six ADLs. ADLs include such functions as bathing, dressing, and eating. The mean number of ADLs that nursing facility residents experienced difficulty in increased from 3.8 in 1985 to 4.4 in 1997 (Sahyoun et al.; Wunderlich and Kohler). The four ADLs that nursing facility residents receive the most assistance with are bathing (96 percent of residents), dressing (87 percent), toileting (56 percent), and eating (45 percent). Approximately 50 percent of nursing facility residents are over the age of 85. Because of these increases in levels of disability (which have lead to much higher levels of frailty) and the trend towards entering the facility later, operational and clinical challenges have increased for administration and staff, who now must care for sicker, frailer residents with more complex medical problems. These changes have occurred in the context of an "increased use of preadmission screening, expanded role of Medicaid home and community-based waivers, the introduction of Medicare and Medicaid managed care programs, the general trend toward prospective payment, and more rapid discharges from hospitals" (Wunderlich and Kohler, p. 22). As a result, "the services that were once provided in the hospital setting are now more frequently available in the nursing home setting; assisted living environments are starting to provide nursing care; and home health agencies deliver services that were once available only in acute care environments or nursing homes" (Fairchild, Knebl, and Burgos, p. 84).

In 1997, approximately 58 percent of residents were admitted to a nursing facility from a hospital or another nursing facility. Another one-third were admitted from their homes, and 40 percent of this group had been living alone. The most common diagnoses at the time of admission were cardiovascular disease, mental and cognitive disorders, and disorders of the endocrine system (i.e., diabetes mellitus); and, almost without exception, residents had more than one diagnosis when they were admitted. These conditions often contribute to functional decline, which can impact ADLs and instrumental activities of daily living (IADLs) such as shopping and taking medication. When combined with other risk factors, such as living alone and low income, these conditions make it more and more difficult for a person to remain independent, increasing the risk for admission to an institutional environment such as a nursing facility.

Financial characteristics

The government's current expenditures for health care clearly favor nursing-facility care, which is costly—a conservative estimate put the cost of a nursing-home stay at $47,200 per year in 1999. Total nursing-facility care expenditures in 2000 were $92 billion, compared to $40 billion in 1988. The Congressional Budget Office (CBO) projects the nation's expenditures for long-term care services for the elderly will exceed $108 billion by the year 2010. The largest portion of these expenditures ($52 billion) will come from Medicaid; out-of-pocket expenditures will exceed $29.3 billion; Medicare will account for $16 billion; and private long-term providers will account for $11.2 billion. Medicare, which was designed to pay mostly for acute care or hospital costs, has historically paid for a very small portion of nursing facility care; this is expected to continue into the future, while long-term care insurance will likely play a more significant role. The growth in expenditures for nursing-facility care is projected to accelerate over this decade because of a number of factors, including rising provider costs in such areas as labor and liability rates. The CBO estimates that inflation-adjusted expenditures for long-term care for the elderly will grow annually by 2.6 percent between 2000 and 2040.

In 1997, average daily charges ranged from $136 for skilled care to $109 for intermediate care. For certified Medicaid beds, rates averaged $98, while Medicare rates were $216 per day. Across these rate categories, significant differences occurred based on such factors as ownership status and region of the country. For example, the rate for a skilled bed operated by a proprietary facility in 1997 was $139 per day, compared to $147 per day for a not-for-profit facility. The average daily rate for that same skilled bed in the northeast was $176, compared to a low of $115 in the South. Between 1990 and 2000, the desire of providers to fill a bed with a Medicare patient depended on the type and level of reimbursement and regulations. Currently, many providers are attracted to the Medicare program because of the relatively high reimbursement rates for these residents.

Administration and staffing

In 1997, it was estimated there were approximately 1.4 million full-time and part-time employees in nursing homes. The recruitment and retention of these employees, although a significant issue for all businesses today, pose some rather unique challenges for nursing-facility providers. The challenge of retention is critical in a nursing-facility environment because of the direct impact it has on quality-of-care issues. The administrative team, working with other staff in a facility, creates the culture of quality care. The ability to create and maintain a culture of quality is often hindered by high turnover of staff in many facilities. Singh and Schwab (1998) report that about 40 percent of nursing home administrators turn over each year, and the American Health Care Association (AHCA) reported in 1997 that the turnover rate for RNs and LPNs was 51 percent and that nurse's aides had a turnover rate of 93 percent. Registered nurses account for only 15 percent of the average nursing staff, while certified nurse's aides account for nearly 66 percent of staff. A number of factors contribute to staff turnover, including job stress, limited career opportunities, pay, and organizational culture. When looking at the clinical staff, the area that receives the most attention is pay. Based on 1997 data, the average RN was paid $16.88 per hour, LPN wages averaged $12.88, and nursing aide wages averaged $7.44. When these relatively low hourly rates are combined with a minimal benefit package, a strong economy, and the demands associated with caring for frail, medically complex persons, the challenge to retain quality employees can be easily appreciated.

The need to improve staffing standards and levels has received increased attention. In 1997, the staff-to-resident ratio for all direct-care staff was 89 per 100 residents and 59 nurse's aides per 100 residents. Certified nurse's aides spend the most time with residents, providing a significant portion of direct care, and yet they are often not well prepared to provide the level of care required by residents with increasingly complex medical problems. Based on the Medicare time studies that used the Online Survey, Certification, and Reporting (OSCAR) system, staffing hours for nurses averaged 3.5 hours per resident day (24 hours) for all nursing facilities in 1998. Registered nurses were found to spend 0.74 hours per resident day, LPNs spent 0.69 hours per resident-day, and nurse's aides averaged 2.09 hours. Because of the wide variation in resident care needs these numbers vary significantly across facilities. In contrast to the OSCAR finding of 3.5 hours per resident-day, a CMS time study came up with 4.17 hours, and a recently convened expert panel found the average to be 4.55 hours.

The recently released Institute of Medicine study on improving the quality of long-term care adds its support to this issue by recommending that CMS not only require RN presence twenty-four hours per day, but also that minimum staffing levels for direct care be developed.

Finally, the increasing role of the medical director has contributed to improving the quality of care. Each facility is required to have a medical director, who provides care to those residents who do not have a primary care provider. The medical director also plays a critical role in shaping clinical policies and procedures. The voluntary certification of physicians as Certified Medical Directors offered through the American Medical Directors Association has assisted physicians to better understand not only their clinical role within long-term care, but also to have a better appreciation of how to more effectively work within a nursing facility and as an active member of the administrative team.

Conclusion

Nursing facilities continue to serve a vital role within the long-term care system, even as they struggle to deal with a number of issues ranging from delivering quality care to adequate reimbursement. The frenetic pace of change is driven by the dynamic environment in which they operate, which seems destined to continue to bring more and more uncertainty to the role they will play in the long-term care system in the future. The recent Nursing Home Initiative by CMS has helped to continue focusing attention on addressing nursing-home quality and on minimum staffing ratios. Whatever the future holds for nursing facilities, one thing seems certain: if they are to survive and prosper, they will have to continue to evolve to meet the ever-changing needs of the residents they serve and to find funding mechanisms to adequately support the services they provide.