TABLE 1 Estimated Gains in Number of U.S. Nursing Homes, Source: February 1960 Report of the Subcommittee on Problems of the Aged and Aging, 1974, 1400% 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.10 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."1 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.13 8 See reference No. 1, p. 395. See reference No. 2, p. 2. 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 TABLE 2 Occupational Composition of Employment 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. 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. 15 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 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 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 1974.22 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 Febru ary 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 Association 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. In 1974, more than $1 out of every $2 in nursing home revenues came from the public funds. Medicare contributed only $3.5 million, but Medicaid paid out about $3.7 billion. Private patients paid $3.5 billion. Other sources, including Social Security benefits, accounted for a sizable amount, although the exact magnitude is not known. As noted previously, less conservative estimates place the value of such "other" contributions much higher. 23 But perhaps the impact of Medicare and Medicaid can best be seen by a comparison of per capita figures. In fiscal year 1967, nursing home care stood at $81.45 per capita. In fiscal 1971, it was almost double at $150.87.24 In 1970 the Federal share of Medicaid amounted to $4.9 billion. In 1973 this amount was raised to $5.2 billion. About 39 percent of total Medicaid funds in 1970 were paid for hospital care and 28 percent for nursing home care. As has already been reported in 1972, Medicaid expenditures for nursing home care exceeded expenditures for surgical and general hospitals for the first time.25 OTHER GOVERNMENT ASSISTANCE TO NURSING HOMES The Department of Health, Education, and Welfare has aided nursing homes with some training of nursing home personnel, in addition to contributing research projects under the auspices of the Administration on Aging. The Department of Agriculture has aided nursing homes through its commodities program. Some 2,019 institutions benefited. An estimated $2.5 million was spent in fiscal year 1972 for food to nursing homes and similar residential institutions for the elderly.26 HEW's Hill-Burton program has provided funds for the construction of nonprofit nursing homes. In 1970, the totals were 1,598 projects built (89,313 beds) at a cost of $455 million.27 The Department of Housing and Urban Development insures loans for the construction of nursing homes under section 232 of the National Housing Act. In 1970, the inventory revealed 759 projects and 75,435 beds at a cost of $573 million.28 The Small Business Administration is authorized to issue loans to proprietary nursing homes. Through 1971 it had extended 1,185 loans at a cost of $103.7 million.29 The Veterans Administration provides skilled nursing care to veterans through its own facilities, by contracting with private nursing homes and through contracts with the States in the form of subsidy payments or grants to build nursing homes. The VA program accounts for about 19,311 skilled beds today for a total cost of $121 million See reference No. 13, p. 2, which details that "more than $6.2 billion was expended on [nursing home] resources and inputs in 1972". See reference No. 5, pp. 80-90. See reference No. 3, p. 150. July 12, 1973, report to Senator Moss from Edward J. Heckman, Administrator of the Food and Nutrition Service. Data supplied to the subcommittee by Hill-Burton program staff at the U.S. Department of Health, Education, and Welfare. See Developments in Aging, 1970, report of the Special Committee on Aging, Report No. 92-46. March 24, Leg. Day, March 23, 1971, p. 203; also materials supplied to the Subcommittee by Mrs. Helen Holt, Director, Nursing Homes Branch, Federal Housing Administration. Report to the subcommittee from the Small Business Administration, Office of Reports, |