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The Social and Economic Impact of Census and Resident Mix in Long-term Care

Published January 30, 2008 4:01 PM by Brian Garavaglia

The long-term care landscape has changed and will continue to change. One of the greatest changes that have been found in long-term care is in census, or the residents that are found in long-term care, often referred to as resident mix. As census has changed, so has the social and economic impact found in long-term care, and the implications in this area will continue in upcoming years. Therefore, some of these important changes will be examined to highlight the myriad of social and economic factors that are involved in census change.

           

Census has always been a driving force for maintaining a financially viable facility. Furthermore, administrators are always examining revenue, expenses, cost control measures, RUG score utilization, and reimbursement rates for Medicaid, Medicare, and third party insurers to find where their facility stands at any given period of time financially, and to understand how the economic landscape will influence their facility in the future.  Census and occupancy rates have always been one of the first things that are examined. Moreover, traditionally nursing care facilities were driven by a census and demographic profile that was typically made up of those over 65 years of age. For the most part, a great deal of this population still exists, but change is happening and will continue to happen for long-term care facilities. 

           

Although seventy percent of nursing care reimbursement comes from Medicaid, in years past this was almost an exclusive reimbursement for those elderly that needed continued nursing home care and exhausted the rest of their financial resources. However, today the demographic profile of many nursing care facilities has shifted and more members of the younger population have now entered the resident mix in nursing homes. There is an economic exchange here that has also happened, which has led to a net financial loss in many instances.   Not only are older adult Medicaid recipients being replaced by younger Medicaid recipients, older adults often come to the facility with Medicare after a qualifying hospital stay where younger individuals, many of whom are poor, come to the facility with no Medicare or private third party insurance prior to being established on Medicaid. So the net result is not a one-to-one redistribution, but a financial loss of Medicare or other third party payment that often is part of the early stay for many older adults.          

           

As demonstrated above, one can see how social changes in census can have a powerful impact on the economic factors found in the nursing home industry, and in particular, on the financial climate of any one nursing care facility. Also, some long-term care facilities have attempted to place themselves into a rehabilitation niche, to take advantage of short-term rehabilitation and extend themselves as post-acute care facilities. For some this has worked, capitalizing a both a younger and older adult population that will come to them with Medicare or very good third party reimbursement. However, for many facilities, and in particular many inner-city or rural area nursing homes, facilities that are often older and are reliant on hospitals providing them with poor older and younger residents, the social changes in census have a powerful impact on the financial status of these facilities. 

 

Many of these facilities are unable to take advantage of better financial resources that certain residents in suburban facilities have at their advantage. When this is coupled with older buildings that have greater primary and preventative maintenance costs and a higher percentage of Medicaid to Medicare/private insurance residents, it should be clearly understood why many of these nursing care facilities are very financially strapped. 

          

However, even the suburban nursing care facilities are starting to feel the economic impact of the social changes in census. Because the nursing care environment is quite competitive, with many facilities competing over the same residents, and since any empty bed is a major cost for the facility, many suburban facilities are also now taking younger residents, something that they often would not have done in the past. As the competitive market for Medicare and private third party payers has increased, concomitantly with the need for some level of cash flow to cover those empty beds and also forestall further reductions in Medicaid payments for not being at a certain census, many facilities now need to accommodate to the new resident mix that is found in their census. 

           

As the mean age of many nursing care facility’s census has been reduced with the addition of younger members, the economic impact of dealing with a more diverse age population with often markedly different clinical profiles also needs to be considered. Accommodating the needs and acuity levels of all age groups with the level of heterogeneity that is presented in a facility can lead to heightened costs for staffing, training, supplies, therapeutic invention and medications, just to name a few. This, mixed with many states having to make budget cuts that can affect the reimbursement rates for Medicaid, can lead to a very problematic financial situation for nursing homes. Regardless of facing strict cost control measures, it is often easy for the needs of a heterogeneous age-based nursing home population to grossly extend their costs that far and exceed the ability to even break even.

           

Today’s nursing homes are no longer the old-age homes of the past. Variability in services rendered, age of the population, types of issues that are found among the census of residents, as well as even the type of staff who exist in long-term care, are quite different. Many long-term care facilities are now an extension of the acute care hospital environment, offering heterogeneous resident mixes, shorter stays, with greater levels of acuity and rehabilitation needs. Furthermore, even those that are unable to take advantage of positioning themselves as a post-acute care facility still have to address the needs of a younger population with wants and desires that they are still going to have to accommodate. Therefore, the social changes of our nursing home environment are driving many of the economic and financial features that are found in the industry.

           

In many ways our state and federal governments need to also become increasingly aware of how the social impact in the nursing home environment drives our industry’s economic changes. When we look at the greater variability found in the nursing home census of today, attempting to subsidize a population just based on apples, when in reality apples and oranges exist, leads to an unmistakable error in financial reasoning.  As the social forces propelling this change continue to become more marked over the upcoming years, advocates in the field of long-term care as well as state and federal government officials will have to determine whether they would like to fund for quality or mediocrity. Please share your thoughts.           

           

                          

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About this Blog


    Brian Garavaglia, PhD
    Occupation: Long-term care administrator
    Setting: Sterling Heights, Mich.
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