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What Needs to be Done to Improve Nursing Home Care

Published January 28, 2015 9:30 AM by Brian Garavaglia

Over two decades ago the report from the Institute of Medicine (IoM) led the way for monumental changes to take place within the nursing home industry. The report of the IoM basically stated that nursing homes needed significant reform and that it was an industry that was loosely regulated, potentially compromising the lives of many who reside within our country's nursing homes. What subsequently followed was a monolithic effort to reform the nursing home industry. Over 28 years has passed since the report came out leading to widespread regulatory changes within the nursing home industry. However, nearly three decades later, we are still left with an industry that continues to face significant problems. Although many do not question that nursing homes have improved, one may nevertheless question that the changes that have ensued have really not been as monumental as was initially planned. In 1987, when the Nursing Home Reform Act or OBRA was introduced, most would have foresaw that in approximately three decades hence, major changes would have resulted with many of the problems that plagued nursing homes then failing to exist as one looked down the road into the new millennium. However, in reality, although some improvements have come to fruition, in reality many of the same problems exist. Furthermore, other problems have also become quite prominent that may have even left the industry in even greater disarray. I would like to take a look at some of these major issues and briefly address each, as well as what needs to be done to correct the issues that are currently found in our country's nursing care centers.

The Primacy of Economics 
A major issue driving many of the other issues found in nursing homes is the economic primacy that surrounds care. Peterman and Williams (2006) have pointed out that many major companies have faced issues of bankruptcy due to the increasing loss of revenue. With the advent in particular of assisted living facilities (ALFs), many individuals who would have once been admitted to nursing homes are now placed within ALF environments. The assisted living environment has cut into the financial backbone of the nursing home industry, leaving it with a lower occupancy rate and with it, less money to take care of an increasingly older and sicker population.

Another major cost-containment reform was the passage of the Balanced Budget Act of 1997 (BBA). Prior to then the payment system was retrospective and nursing homes were paid in full for care provided to qualified Medicare residents. With the passage of the BBA that changed. Payment went to a prospective payment system, similar to DRG's that were instituted in hospitals a decade earlier.  Now payments were based on specific diagnostic and rehabilitative codes that were associated with a particular reimbursement level. This made payment more unwieldy and typically what is billed for and what is authorized by Medicare left many nursing homes short of the actual cost of services rendered (

Furthermore, most payments received by nursing homes for services were paid for through Medicaid. Medicaid, a medical policy initially put in place for the indigent, has come to be responsible for approximately 70 percent of the remuneration found within the nursing home industry. However, Medicaid has notoriously paid low amounts, often far below the cost of services for the resident. In addition, Medicaid has often fluctuated upwards and downwards without much notice, leaving many nursing care facilities at the whim of what Medicaid will eventually pay (Peterman and Williams, 2006). Moreover, with many assisted living facilities admitting many older adults, who then pay for their assisted living services through their own cash savings, this has left the nursing home environment admitting many who only are able to pay with Medicaid, which as previously stated often pays far below the cost of services that are rendered to an older and sicker clientele that needs much more continuous and ever-increasing levels of invasive and professionalized care. So here is a major quandary. Assisted living services are often getting considerable cash income and have an environment with low overhead costs. Conversely, nursing homes are taking on an older and more infirm population and are (1) having to work within a climate in which Medicare reimbursement is becoming more parsimonious, and (2) Medicaid, the prevailing level of payment, is often paying an unrealistically low level for service costs that frequently far exceed the Medicaid payment rendered to the nursing home.  What do nursing care facilities do to address this dilemma?

The largest cost to the nursing care environment is staffing. Approximately 70 percent of the operational cost is due to staffing. Therefore, the most common and reflexive knee-jerk response for nursing home companies in reducing operational costs is to reduce staff. In addition, having to recruit better personnel is often difficult if one is attempting to cut costs in staffing by reducing the number of personnel as well as through offering lower wages to professional staff. This is not conducive to nursing home environments that are witnessing higher levels of acuity. Recruiting professionals with important skills that address the myriad of needs that are now found in the nursing home environment require offering workers competitive wages and having an appropriate number of skilled professionals working all shifts within the nursing facility.  This however is not found among most nursing care facilities.

With a lower nursing home census coupled with further reductions in private pay, Medicare reimbursement, and an increasing dependence on a lower pay funding source (Medicaid), nursing homes are streamlining operational budgets, especially through reduced staffing and minimizing the number of more qualified skilled nursing personnel.  This all too common strategy toward addressing these pervasive issues has often led to compromised levels of care (

Here is the irony to the above stated issue. During an era when nursing home reform has emphasized the need for adequate staffing requirements, appropriate staffing often fails to exist. Furthermore, at the same time that the federal and state levels of government have continued their adjuration for improved staffing, they have also failed to maintain adequate funding to nursing homes. Reimbursement has not kept pace with 1) the increasingly higher level of acuity found in nursing homes; 2) the need to competitively recruit highly skilled personnel that often gravitate toward higher paying hospital environments; 3) the increasingly higher rates of inflation in many areas of health care services; and 4) the unrealistic assumptions found within Medicaid payments and bundled packaging of Medicare that often encourages extreme streamlining with the thought of fostering greater efficiency when in reality it often encourages reduced caregivers and an elimination of important services that could be provided if funding was available.

Moreover, recently the Centers for Medicare and Medicaid have added penalties to hospitals that receive residents back within a 30 day window, and these same penalties will also be introduced into the long-term care setting starting in 2018 (Luke, 2014; Rau, 2014). Many hospitals have started working with nursing homes to share in the penalties for residents returning within a 30 day period that are now instituted. Here again, however, this often will take further money away from treating many individuals that often have very severe conditions that may lead to unavoidable returns to the hospital. Having this type of policy could 1) potentially lead to many individuals staying within nursing care settings too long during periods of acute exacerbations, further jeopardizing their lives when they should return to the hospital due to fears that they may be financially penalized by CMS, and 2) Medicare regulators often paying excessive attention to financial bottom lines that are unrealistically promulgating policies that may do more harm than good (    

Other Problems That Continue to Exist   
The guardian of nursing home quality is the survey process. These surveys are typically completed by state inspectors, although at times federal surveyors will conduct surveys as well. The survey process was instituted to assure compliance with the federal regulatory requirements. Surveys are done annually, conducted within a nine-to-15 month window. Complaints surveys are also done when complaints are received on nursing homes. Although surveys create a monitoring device that oversees nursing home compliance, it is far from a process that has worked well. First, many surveyors often have never worked within long-term care themselves. Many become surveyors after a short period of training and subsequently are then placed into an environment in which many have never had any firsthand experience with as direct-care workers and caregivers.

Furthermore, the survey process, instead of being facilitative toward a common goal of improving the care of the nursing home resident, is often adversarial. The nursing care facility and its staff and the survey staff are often viewed as being on opposing sides. Unfortunately, the survey process, which could be a very productive process if it was developed for both parties to cohere and work together has devolved into a divisive interaction. In fact, surveyors often state that they cannot provide information in assisting the facility with their plan of correction even though they are well aware what they would like to find in a plan of correction for it to be accepted. 

The survey process also continues to notoriously be a very subjective process. Far from being objective and guided by objective indicators, the surveyors often use their own perspectives to determine whether they should establish that a violation does exists and whether a citation should be levied against the facility. The surveyors are still guided by federal regulations that they cite, but their own unique perspectives help to further determine whether a regulatory violation exists. Different survey teams found in different areas and different states often give different numbers and levels of violations. Therefore, the survey process is far from objective and standardized (Ornstein & Groeger, 2012).

Another issue that also needs to be addressed is the issue of ownership. It is well-established that for-profit nursing care facilities often have higher rates of citations and lower staffing ratios. Furthermore, the Government Accountability Office (GAO) has found that for-profit facilities were demonstrably poorer performers nationally as compared to not-for-profit facilities (Centers for Medicare and Medicaid Advocacy). What is often more disconcerting is that many nursing facilities have now been purchased by larger equity firms whose expressed goal is to focus on the profit incentive. In fact, for-profit facilities are now the most common form of nursing care facilities and most of these facilities are now becoming co-opted by large equity firms with individuals who often have very little, if any experience, in health care. 

Private equity firms have become a common type of group that has come to play a significant role in American business. Their goal is to invest and make a profit. However, this form of business endeavor, using a traditional business model with individuals who have little knowledge of the long-term care industry often leads to problems that have continued to haunt the nursing home environment. Maintaining cost-control is very important. An important problem in health care today is attempting to curtail the inflationary environment that is found in health care. 

However, attempting to make profit at the expense of cutting costs within a long-term care environment that has become increasingly more complex and diverse in the types of conditions and clientele that they treat is a problem that continues to plague nursing homes. 

Even more problematic is that the ownership that often is insisting on instituting many of the cost-cutting maneuvers are oblivious toward understanding how their decisions are having or will have a negative impact on the clientele that they are ultimately suppose to be servicing. They are unable to disentangle their concern of profit margins from the nursing home resident. Profits and residents are compiled together as a form of capital that needs to be invested in and monitored for their returns. This kind of attitude has led to an instrumentalism that conceives of the nursing home resident as a type of capital investment.       

One final thing should be mentioned before we leave this topic. It has been mentioned that the economic primacy of the nursing home environment is the prevailing issue that often foments many of the problems that have been mentioned. As has already been mentioned, Medicare and Medicaid payments have not kept up with the inflationary health care costs found in long-term care. In addition, many nursing homes have now lost further economic resources due to the assisted living facility industry admitting many individuals who would have been formerly admitted to nursing home environments. In addition to this loss in reimbursement and loss of resident population, many nursing care facilities have further been plagued by civil monetary penalties (CMP) that the government places on nursing homes that have poor compliance. However, the problem with using a monetary penalty levied against nursing homes is that a punitive financial measure is ultimately harming the residents that it is supposedly intended to help. There is an inherent contradiction in this logic of using CMPs as a corrective action. Since the government is stating we will not provide financial payment to a facility as a penalty for not providing appropriate care, and subsequently since residents are inclusive in that nursing home environment that is penalized, the residents are ultimately the one's that a further harmed, not just by the facility's noncompliance in care, but also through taking money away from the facility that would go toward allocating appropriate provisions and care to nursing home residents.

Although there has been some appreciable advances in nursing home care since the advent of the Omnibus reconciliation Act or OBRA of 1987 that created widespread nursing home reform, to think that the nursing home industry has made quantum leaps since OBRA was introduced would be to delude ourselves. In reality, there has been improvement in some areas. In other areas the improvement has been negligible at best. Moreover, when one examines the landscape in totality, the level of improvement from the middle part of the 1980s to now is far from what one would have hoped for given the high aspirations that were often associated with the nursing home reform movement. This being stated, we should not be dismissive toward the small changes that have occurred, but look at them realistically and use them to build further and more progressive changes. However, as has been detailed in this paper, we have to move beyond the current environment that exists within long-term care. A paradigm shift needs to be instituted. This paradigm shift has to be a true paradigm shift, not a fallacious shift as has been witnessed over the past 30 years. A true paradigm shift will see surveyors and nursing home staff working collaboratively and not at disparate ends. A true paradigm shift will hold ownership increasingly responsible for many of their decisions. A true paradigm shift will focus on enhancing resident care and resident's lives within nursing homes as an end in itself and not associate the resident as a type of capital. A true paradigm shift will not continue to add layer upon layer of regulations, which ultimately leads to nursing homes being more concerned with the regulatory environment and not the resident who becomes lost in the regulatory labyrinth. Finally, a true paradigm shift will not institute punitive measures and say they are an attempt to enhance compliance and better resident care when in fact they work quite to the contrary. What was mentioned in this paper was by far not an all-inclusive list of problems and remedies. However, enough has been stated at this time to allow those who read this to assimilate and ponder the information as well as being an initial step toward helping to stimulate discussion on how to enhance an industry that continues to need much remediation.          


Centers for Medicare and Medicaid Advocacy (n.d.).  Non-Profit vs. For-Profit Nursing Homes: Is there a Difference in Care?

ElderLawAnswers (n.d.).  How Bad Off Is the Nursing Home Industry?

Luke, J. (2014).  SNF readmission penalties announced: Is your facility ready?  Californial Association of Long-Term Care Medicine.

The Nursing Home Crisis: Public Policy Gone Awry No. 140.  Americans For Democratic Action.

Peterman, N. A. & Williams, C. B. (2006).  Skilled Nursing Home Facilities: The Challenge of the 21st Century.  American Bankruptcy Institute Journal.   

Ornstein, C. & Groeger, L. (2012).  What we found using nursing home inspect.  ProPublica.   


Rau, J. (2014).  Medicare Fines 2,610 Hospitals In Third Round Of Readmission Penalties.  Kaiser Health News.


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About this Blog

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