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PART 2

GROWTH OF THE NURSING HOME INDUSTRY

One of the first inventories of the Nation's nursing home industry was a 1939 study on institutional mortality by the Bureau of the Census, which counted 1,200 facilities and 25,000 beds. By 1960, there were 9,582 homes and 33,000 beds. Between 1960 and 1970, the number of nursing homes and related facilities increased 140 percent to 23,000. The number of beds more than tripled, to 1.1 million.1

Nursing homes can be classified by the level of care they provide. In 1972, there were 9,244 skilled nursing facilities with 643,403 beds; there were 4,455 intermediate care facilities with 217,922 beds and 9,292 related facilities with 238,087 beds.2

In 1974, some 7,300 facilities qualified for Medicaid benefits as skilled nursing facilities. About 4,000 were also certified to participate as extended care facilities under Medicare. A few hundred qualified only for Medicare. About 8.500 participate in the Medicaid intermediate care program. The 1972 Social Security amendments unified Medicare and Medicaid standards so that a facility qualifying for one program was automatically eligible for the other.

Mere numbers of institutions do not adequately measure the growth of the nursing home industry. An even more informative indicator of their growing importance can be shaped from the following new and not generally known facts:

-There are more nursing home beds (1,235,404) in the United States than general and surgical hospital beds (1,006,951).3 -There are more than three times as many nursing homes (23,000) than hospitals (6,630).*

-More in-patient days of care were given in long-term care facilities (384.2 million) than in short-term general hospitals (262.7 million).5

-Expenditures for long-term care increased 1,400 percent from $500 million in 1960 to $7.5 billion in 1974.6

-For the first time, Medicaid expenditures in 1972 for nursing home care exceeded payments to general and surgical hospitals 34 percent as compared to 31 percent for hospitals.

1 See table 1. p. 21.

2 "Study of Health Facilities Construction Costs," U.S. General Accounting Office, November 28, 1972, p. 793.

3 See reference No. 1, pp. 356 and 385. See p. 27 for references mentioned in footnotes. See reference No. 1, pp. 356 and 385.

See reference No. 13, p. 2.

See appendix 10, p. 162.

7 See reference No. 3, p. 150.

TABLE 1

Estimated Gains in Number of U.S. Nursing Homes,
Number of Beds, Employees and Expenditures for
Care, By Percent 1960-1970

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Source: February 1960 Report of the Subcommittee on Problems of the Aged and Aging,
U.S. Senate Labor and Welfare Committee; White House Facts Sheet, Aug. 6, 1971;
Developments in Aging, 1970, US. Senate Special Committee on Aging, p. 42;
American Nursing Home Association 1970, and earlier Fact Books

1974, 1400%

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I. CHARACTERISTICS OF THE INDUSTRY

In many ways the nursing home industry in this Nation is unlike any other in the world. Part of it was established by church groups and philanthropic institutions, but these nonprofit facilities could not keep up with the burgeoning number of the chronically ill elderly. By far and away the greatest growth of the industry came after the enactment of Medicare and Medicaid, as the availability of public funds helped fuel the tremendous expansion of the industry. Public funds account

for about $1 out of every $2 in nursing home revenues. There are few industries so dependent on government.

What are the characteristics of this growth industry?

Average size: In 1971, 53 beds; 59 percent had fewer than 50 beds. Seventy-seven percent of the nursing homes in the United States are operated for profit: and these proprietary homes control 67 percent of the beds. Fifteen percent of the U.S. nursing homes are philanthropic, accounting for 25 percent of the beds. Eight percent of the homes and beds are government controlled.'

There is very little agreement as to the average cost of nursing home care in the United States: There are great variations from study to study. The range is $200 to $1,200 per month. HEW studies are underway to determine more definitive cost data.

Many studies confuse average charges with costs. Charges reflect what nursing homes bill private paying patients. There is some agreement that the average monthly charge for U.S. nursing homes is now about $600. Cost relates to how much operators must spend to provide quality care; many provide it for far less than $600 a month.io

There is also very little agreement as to the number of nursing home beds that are needed: No firm national data are available. The few studies available indicate a national vacancy rate of 13.2 percent. Others suggest a need of 173,797 beds in 1973. Many locales will have a relatively high number of empty beds, but an acute shortage of beds for welfare or Medicaid patients.11

The growth in both size and number of nursing homes is startling: It can be seen in the increase in the number of patients. There were 290,000 patients in 1960 and 900,000 in 1970, for a 210 percent increase. By 1973 there were more than 1 million patients.12

II. AN INVENTORY OF NURSING HOME PERSONNEL

The number of nursing home employees increased by 405 percent from 1960 to 1970. In 1970, some 215,000, or 43 percent were aides and orderlies (280,000 in 1972); 7 percent were professional nurses; and 8 percent were licensed practical nurses. Table 2 provides a precise percentage breakdown. Nursing home employees have an average yearly turnover rate of 60 percent."

8 See reference No. 1, p. 395.

See reference No. 2, p. 2.

13

10 See reference No. 12, p. 5; reference No. 8, p. 5; Survey in Nursing Homes, August 1971. p. 6; reference No. 13, p. 8.

11 See reference No. 8, pp. 2-3; reference No. 9, table 11; "Trends in Long-Term Care", part 6. hearing by the Subcommittee on Long-Term Care, San Francisco, California, February 12, 1970, p. 504.

12 See reference No. 12, p. 4; reference No. 13, p. 1; see also table 1 on p. 21 of this. report.

13 See reference No. 2, p. 2; reference No. 7. pp. 3-6; reference No. 1 projects 583,974 full-time employees in 1971, p. 401; reference No. 13 projects 722.200 full-time equivalent employees working in nursing homes in 1973-74.

TABLE 2

Occupational Composition of Employment
in Surveyed Nursing Homes and Related
Health Care Facilities.

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Note: Percents do not add due to rounding.

Source: U.S. Department of Labor, Manpower Administration.

ADMINISTRATORS

In 1969, there were about 18,390 nursing home administrators in the United States. Their median age was 53. Some 47 percent were employees; 44 percent were self employed; and 9 percent were both owners and administrators.

Some 91 percent were administrators of only one facility. Median experience for these individuals was 8 years in a hospital or nursing home, and many had been at their current jobs for 5 years or less.

About 79 percent had completed high school, and 51 percent had some training thereafter. However, 72 percent had no undergraduate or graduate degree, and 65 percent had never taken a course in nursing Home administration.14

Sources conflict as to the number of female administrators. Older studies show a higher incidence of females. Best current estimates show 60 percent of administrators are male.15 Salaries are even more uncertain. Studies show $8,500 in 1969 and $15,000 at present. Committee inquiries support the latter finding for 1972.16

All administrative personnel had a turnover rate of 21 percent in

1970.

14 See reference No. 14, pp. 2-4.

15 See reference No. 17, p. 46, and Stone, Eric, "Characteristics of the Nursing Home Administrator in New Hampshire 1972", Nursing Homes, December 1972, pp. 7–10.

16 See Supporting Paper No. 9 on Profits.

PROFESSIONAL NURSES

In 1973, 56,235 registered nurses were in nursing homes. They made up 20 percent of all personnel in Connecticut and 3 percent in Oklahoma and Arkansas.

Registered nurses received $3.75 an hour on the average in 1970.

They show a vacancy rate of 8 percent and a turnover rate of 71 percent a year.17

LICENSED PRACTICAL NURSES

There were some 40,000 licensed practical nurses employed in nursing homes in the United States in 1970. Twenty-five percent were licensed by waiver (that is, by past experience rather than on the basis of formal education). Licensed practical nurses received about $2.60 an hour for their work. They had a vacancy rate of 14 percent and a turnover rate of 35 percent.18

AIDES AND ORDERLIES

Unlicensed personnel comprise 43 percent of the staff, and most are women. The 215,000 aides and orderlies received an average of $1.70 an hour in 1970 for their work. They had a job vacancy rate of 4 percent and a turnover rate of 75 percent a year.19

RATIO OF EMPLOYEES TO PATIENTS

All in all, there were 5.3 nursing home employees for every 10 nursing home patients in 1971. General and surgical hospitals by contrast average 26 employees for every 10 patients.20

III. FUNDING AN INDUSTRY: THE SUBSTANTIAL
PUBLIC SHARE

In recent years, public funds for nursing home care have increased sharply.

Total revenues for the industry in 1960 were $500 million. By 1970, they had increased 460 percent to $2.8 billion. In 1974, revenues from all sources had reached an estimated $7.5 billion which is a full 1,400 percent increase from 1960.21

Nursing homes have an increased share of the total Nation's health dollar. In 1960, they accounted for more than 1 percent, growing to 4 percent in 1970 and to about 7 percent in 19.4.22

17 See reference No. 7, p. 8. See also: "Facts About Nursing," p. 7, American Nurses Association.

18 See reference No. 7, pp. 10-11.

19 See reference No. 7, p. 13. There were 280,000 aides and orderlies employed in 1972. Aides today average $2.00 per hour-the minimum wage.

20 Assuming there are 1.1 million nursing home patients and 583,974 full-time employees in 1971, the ratio would be .53 employees per patient. Reference No. 2, p. 2. indicates 900,000 patients in 1970 and 505.031 employees for a ratio of .67 for 1970. See also February 16, 1971. New York Times, pp. A1 and 27. HEW advises that there were 6.6 full time equivalent (FTE) employees for every 10 nursing home patients in 1973, while hospitals average 32.3 (FTE) employees for every 10 patients.

21 See reference No. 3. pp. 149-50; reference No. 12, p. 3; Nursing Homes, January 1972. p. 12; Statement of Wiley M. Crittenden, Jr., President, American Nursing Home Associa tion before the National Conference on Inflation, Washington, D.C. September 19. 1974. also August 15, 1974 letter from Frank E. Moss to the Honorable Wilbur Mills, Chairman, House Ways and Means Committee, app. 9, p. 158.

22 Fortune Magazine, January 1970; see reference No. 11, pp. 24–25.

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