Private pay rates for nursing home care are continuing to rise and vary widely by region, according to a new study.
The average nursing home rate for a private room has risen 8% to $181 per day, from $168 per day in 2002, according to MetLife's 2003 survey of nursing home and home-care costs.
Nursing home operators are facing heightened government scrutiny for quality of care while the costs of providing that care are growing exponentially, said Susan Feeney, a spokeswoman for the American Health Care Association, a Washington-based trade group that represents 12,000 long-term-care providers.
"The federal government is increasing its oversight on nursing homes to improve quality without a financial mechanism in place to pay for that quality," Feeney said.
Quality issues, along with accompanying liability costs, have been troubling the nursing home sector for some time. Beverly Enterprises, a for-profit nursing home chain based in Fort Smith, Ark., paid $2 million last year to settle civil charges of abuse at a Santa Barbara, Calif., nursing home (Aug. 12, 2002, p. 22.). The company shed its Florida operations earlier that year, shored up its liability reserves and pledged to step up improvements in quality.
As liability costs begin to skyrocket and labor pools for elder care continue to shrink, providers are looking at increasingly bigger operating expenses, Feeney said. At the same time, reimbursements from payers have been dwindling.
"Nursing homes have been under tremendous financial pressures all across the country," Feeney said.
Private pay rates varied widely by region. Alaska and the city of New York had the highest average daily rates of $420 and $346, respectively, while Little Rock, Ark., and Shreveport, La., had the lowest at $117 and $96.
Semi-private room rates increased at a slightly faster pace than private rooms, rising 11%, to $158 per day, from $143 last year. The average hourly rate for home healthcare inched above $18, up 3% from last year's rate.
Results were compiled from telephone surveys of private pay rates at 476 nursing homes and 513 home-care agencies in 50 states and Washington, D.C.
Sandra Timmermann, director of the MetLife Mature Market Institute in Westport, Conn., who echoed Feeney's comments, said nursing home operators are paying more for liability and labor costs at a time when states are dealing with record budget shortfalls by slashing Medicaid funding.
"If reimbursement rates are going down, the private pay rate might have to compensate in some way," Timmermann said.
Also, costs at nursing homes are going up as they treat an increasingly sicker and more disabled elder population. With seniors staying at home longer and having more options for elder care such as assisted-living facilities, nursing homes have become a "last resort," Timmermann said. "You're going to find the more frail population at nursing homes."
The MetLife report cites U.S. Census Bureau figures that show the 90 to 94 age group as among the fastest-growing segment of the population in 2000, having grown 45% since 1990. "Longevity is a double-edged sword," Timmermann said. "People are living longer in poorer health."