Rising costs for private-pay nursing home residents can be partly attributed to increased competition for residents from other types of facilities, industry experts said. Nursing home residents who weren't receiving Medicaid or Medicare benefits paid an average of $192 per day in 2004 for a private room, a 6.1% increase from $181 per day in 2003, according to an annual study released last week by the MetLife Mature Market Institute, a division of MetLife that researches aging and long-term-care issues. That's $70,080 annually, up from $66,065 annually in 2003.
The cost has outpaced general inflation in part because seniors are choosing facilities other than nursing homes, said Sandra Timmermann, director of the institute. "Ten years ago people who would go to nursing homes are now in assisted-living facilities," Timmermann said.
Since nursing homes offer round-the-clock care, healthier residents are choosing to live in assisted-living facilities while nursing homes are left with those who need more care, which drives up costs for the nursing homes.
Assisted-living facilities aren't federally regulated, but generally they offer housing and services such as medication reminders, meals and laundry but not round-the-clock nursing care. MetLife's 2003 assisted-living survey said yearly costs for those residents, at around $28,548, are much lower than at nursing homes.
Other options for seniors include continuing-care retirement communities and home-care programs.
The MetLife study also said the average rate for home-care aides is $18 per hour, unchanged since 2003. MetLife said it only collected information on private-pay residents and included data from 975 nursing homes and 790 home health agencies across the U.S. From 1995 to 2002, the number of assisted-living facilities grew 127%-to 36,299 facilities from 16,021-according to a 2002 biannual study produced for the National Academy for State Health Policy.
To keep pace with these growing segments of the long-term-care industry, nursing homes are starting to offer other services, such as home care, said Deborah Cloud, a spokeswoman for the American Association of Homes and Services for the Aging.
Seniors who need 24-hour care are more suited for a nursing home, she said. Because of this, when seniors do decide to enter nursing homes, they are usually more frail and need a higher level of care, which is more costly. The facilities also need more skilled workers to care for the sicker residents.
Increased payments from private-pay residents are also needed because Medicaid payments are on average about $10 to $12 below what it costs to care for those residents, said Peter Clendenin, executive vice president of the National Association for the Support of Long Term Care, an advocacy group for the long-term-care and post-acute-care industries. This is compounded by the fact that about 66% of nursing home residents, according to the CMS, are on Medicaid, he said.