2018 Review: America’s Nursing Homes Under Increasing Strain

2018 Review: America’s Nursing Homes Under Increasing Strain

Nursing home residents discussing the 2018 nursing home review

A December 2018 Pittsburgh Post-Gazette article, “What’s a nursing home to do?” takes a thoughtful look at the complex interplay of factors contributing to a looming financial and operational crisis for America’s nursing homes in the coming years and decades. The article addresses issues specifically facing long-term care skilled nursing facilities, not short-term skilled nursing rehabilitation facilities or assisted livings, personal care homes and in-home care options for the elderly and infirm, although the authors state that these other types of care options are facing similarly challenging trends.

The Numbers Tell the Story: Aging America

  • More than 50 percent of America’s households are headed by someone age 50 or older.
  • Within 20 years, there will be 79 million Americans age 65 or older, representing 21 percent of our nation’s total population.
  • The increase in demand for aging services of all types is expected to grow dramatically along with this increase in the senior demographic.
  • The ratio of retirees to working Americans is shifting in a precarious direction:
    • In 1980 there were 19 retirees for every working American age 18-64.
    • By 2030 it’s expected that there’ll be 35 retirees for every working American.

Long-Term Care Nursing Homes: The Facts Speak for Themselves

  • There are currently approximately 1.4 million long-term nursing home residents in 15,500 skilled nursing facilities in the U.S.
  • The average nursing home resident stay is 900 days, or nearly three years.
  • The average cost per nursing home resident is $10,000 per month.
  • Most nursing home residents don’t have long-term care insurance and can’t afford to pay out of pocket without becoming impoverished.
  • In Pennsylvania, for instance, nursing homes depend on state medical assistance for 70 percent of their revenue.
    • The state reimburses nursing homes at only about 81 percent of what the actual cost of providing care to these nursing home residents.

Nursing Homes: Under Mounting Financial and Operational Pressures

  • Average occupancy rates at nursing homes have fallen to about 81 percent.
    • Short-term skilled nursing stays are growing shorter due to the influence of Medicare Advantage managed care programs
    • Initiatives to treat patients at-home have increased in popularity.
  • In 2016, the average nursing home profit margin was a scanty 0.5 percent.
  • With declining numbers of American workers and caregiver pay of about $12 per hour, nursing homes can expect to face a declining pool of skilled and caring employees to staff their facilities.
  • Increasing nursing home employee wages would be difficult in the context of declining revenues.