Last posted by Philip Moeller | pbs.org
For all of us, the future will include a period — perhaps brief, perhaps extended — of frailty and physical decline. No one is immune. Broccoli and advice from relatives are things we apparently like to avoid, and clearly many people have added old-age planning to that list. I hope you don’t.
I would like to scare the stuffing out of you today but will try to lighten the tone enough so that you don’t kill the messenger. Still, I want you to feel a compelling need to spend just an hour or maybe two doing some planning for the future.
Historically, you would have relied on loved ones to look after you. Now you are increasingly likely to depend on the kindness of strangers.
Because when the inevitable day of your own frailty arrives, you will no longer be able to take care of yourself. Historically, you would have relied on family members and other loved ones to look after you. Now you are increasingly likely to find yourself depending quite literally on the kindness of strangers. These people will work in the health care business and many of them will be paid caregivers, either in your home or a nursing home or other type of assisted care facility.
Looking at the rising numbers of older citizens who will need care, and the shrinking numbers of younger people available to care for them, it has been clear for a long time that we are heading toward a serious shortage of caregivers. Changes in and fragmentation of the American family have made things worse.
More ominous still is the prospect – very real right now – that we will be aggressively curtailing legal and illegal immigration, thereby turning this labor shortage into a crisis. While I like a cuddly Care Bear robot as much as the next person, automation is not going to happen soon enough, or at the scale needed, to make a big dent in this shortage.
These trends will put pressure on the price and quality of caregiving. They don’t come at a particularly great time for the companies that operate nursing homes, other care facilities and at-home caregiver agencies.
The cost of care has been steadily rising and can top $100,000 a year at some nursing homes. Medicare does not cover non-medical care, so consumers will increasingly be looking at big out-of-pocket expenses.
The quality of care is also a growing concern. There have been troubling reports about people being abused by staffers at nursing homes, including unnecessary use of antipsychotic drugs. Getting qualified in-home care has become harder as well, including getting Medicare to pay for this very clearly approved benefit.
Looking ahead, projected trends only add to the need to plan carefully for caregiving needs.
Plante Moran provides business services to nursing homes and other senior living providers. It has just published its annual review of skilled nursing facilities.
Demand for nurses and health care aides is booming, the report notes, leading to upward movement in wages. At the same time, Medicare and Medicaid are tightening the screws on how much they are willing to pay nursing homes. They are doing this by placing more emphasis on managing patient care as opposed to the traditional fee-for-service model.
Historically, nursing homes were paid per-diem rates for their Medicare and Medicaid patients. The coverage lasted for a fixed number of days, and the overall cost of care often did not seem like a high priority. Managed care, by contrast, looks not only at what such care costs but at now successful it is. This is reducing average stays and can’t help but put downward pressure on nursing home revenues.
Medicare and Medicaid are tightening the screws on how much they are willing to pay nursing homes by placing more emphasis on managing patient care.
For Medicare patients, the national average stay declined to 46 days in 2016 from 49 days in 2015, Plante Moran says. For Medicare Advantage plans, which tend to enroll healthier people and aggressively manage care costs, the average stay is typically less than 20 days.
In the short run, many nursing homes are facing tough times, the report notes. The growing popularity of home-based care and the cost controls of managed care helped reduced national occupancy rates to 82 percent in 2016 from 87 percent the previous year.
While this has placed pressure on operating costs, a strong general economy is making it harder for homes to find caregivers unless they improve salaries. More facilities are outsourcing caregiving to third-party providers to better control costs. As occupancy rates fluctuate, homes can quickly adjust outside staffing needs and do not have to hire or fire their own employees.
These trends will inevitably lead to changes in nursing-home operations and business models. Larger and more aggressively managed chains (think Walmart) will emerge to replace smaller providers (think Main Street retailers). The big Medicare and Medicaid insurers, along with increasingly large hospital systems, will partner with caregiving firms or simply buy them.
Inevitably, some of these providers will perform better than others. If you are going to need care in this environment, or if you are the adult child of someone who will need this care, you must identify the winners and losers of this process in order to make smart, informed decisions.