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Underfunded Nursing Homes Closing, Leaving Some Seniors Stranded


A new study released by the American Health Care Association (AHCA) has found that, across the nation, nursing facility care has been underfunded by Medicaid by about $5.6 billion. The financial difficulties have caused closures of nursing homes, primarily in minority and poor communities.

Mark Parkinson, President and CEO of the AHCA state that “Today’s nursing facilities are paid less than the minimum wage.” Medicaid pays on average $7.17 per hour per patient. The current minimum wage in the US is $7.25. “There is a vast gap between the actual cost of providing quality eldercare and what the Medicaid program truly finances,” he concludes.

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Medicaid funds about 64% of the care provided in America’s skilled nursing facilities. Individuals (private-pay or long-term care insurance) are the other major funding source. Medicare will pay for a short-term rehabilitation, but does not reimburse for long-term care in a nursing home.

The AHCA report, compiled by the research group Elijay LLC, also identifies which states are most affected by state Medicaid budgets. At the top are New York (over $1 trillion in aggregate Medicaid underfunding), Illinois, Massachusetts, New Jersey, California, Pennsylvania and Ohio.

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A separate study, published in the Archives of Internal Medicine, finds that between 1998 and 2008, about 5% of the available beds in the US were eliminated due to nursing home closures. Over 1,770 freestanding nursing homes and 1,126 hospital-based facilities closed.

Closure rates were over 35% higher in zip codes with the highest percentage of minorities, such as blacks and Hispanics. Also, the risk of closure in zip codes with the highest level of poverty was more than double that of those in zip codes with the lowest poverty rates.

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"The cumulative loss of nursing facility beds in the aftermath of closures, combined with the lack of alternative long-term care services in these disadvantaged communities and increasing use of nursing homes among minority elderly people, suggests that disparities in access will increase," concludes Zhanlian Feng PhD of Brown University who analyzed information collected from a national database of Medicare/Medicaid-certified nursing homes in the United States.

According to Dr. Mitchell H. Katz, who writes an editorial accompanying the report, “It is estimated that by 2050, 27 million people in the United States will need long-term care (home, community, or institutional), an increase from 15 million in 2000.”

A solution, he says, is improving access to home-based care and other community-based care models, such as assisted living facilities. But at the same time, “we must demand for our patients and for our families sufficient availability of high-quality nursing homes in the communities where people have lived.”

Source References:
“A Report on Shortfalls in Medicaid Funding for Nursing Home Care”, December 2010
Arch Intern Med. Published online January 10, 2011. doi:10.1001/archinternmed.2010.493.