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.