Nursing Home Crisis Puts the Frail Elderly at Risk

The symptoms are eerily familiar: excessive government regulation; demand that exceeds supply; price controls; an unstable economic model; a lack of long-term planning; rapidly increasing costs; and investors who are put off by an increasingly speculative and unprofitable industry.

I’m not talking about the state’s troubled power industry but another crisis that threatens to hurt or kill many of California’s frail elderly. In this crunch, Californians are losing access to good nursing care for their loved ones. And just like the energy crisis, taxpayers will have to pay millions to repair it.

Here are the facts: The federal government on Oct. 1, 2002, cut $36 per day from Medicare reimbursement. This draconian cut alone cost the state $152 million a year and exposed as too low the reimbursement from the state’s already cash-strapped Medi-Cal program.

Daily care rates average less than $118. Salaries, wages and benefits for nurses and all other facility labor absorb $84 of that total. The remaining dollars must be stretched to cover food, rent, activities, medicine, laundry and utilities -- not to mention growing insurance costs. And there are more cuts on the way because Medicare reimbursements had been propped up by the troubled Medi-Cal program.

Unless Congress acts quickly, effective July 1, Medi-Cal beneficiaries will have their rehabilitative therapy needs capped at $1,590 per year. This is the only source of funding for rehab care for many older people. Without it they have little or no chance to return home or to a less-intensive level of care.

Add all of these growing costs together and California is about to pull the economic plug on nursing homes. For years, many nursing homes have been forced to care for the elderly at below cost. This chronic underfunding has stalled construction of new facilities. More than 10% of facilities are in bankruptcy. Recently, one of the largest nursing home chains in California was forced to stop paying rent.

The governor’s proposed budget includes a 15% cut that will reduce the previously mentioned $118 figure to about $100. According to a University of California study, this cut alone will cause 88% of California’s nursing homes to lose money.

Those unfamiliar with nursing home staffing regulations are quick to say “Cut your costs and you’ll be OK.” But we have a minimum staffing mandate of 3.2 nursing hours per patient day, and that will increase next year because of recent state legislation.

Cutting staff is the last thing we should be doing. And our existing staff should be earning wages competitive with those at hospitals.

If the California cuts are implemented, nursing homes will close. Residents and workers will be displaced. And older patients -- who suffer from trauma when forced out of familiar environments -- will suffer and die. Families will lose access to nearby quality care for their loved ones because, when the economics don’t work out, facilities will be closed.

Frail, elderly patients will find it difficult to find a new home because the average occupancy rate is well over 90%. There won’t be enough empty beds available, so many patients will have to be moved many miles from their families. Nurses and other workers will be laid off, adding to the strain on California’s economy.

And, ironically, the proposed budget cuts will actually cost California more money than they save because the state will lose out on federal matching funds now provided for nursing care.

Medi-Cal is funded 50/50 by Uncle Sam, so cutting $1 in Medi-Cal will cause the federal government to cut $1.

Absent nursing home beds, more patients will end up in acute-care hospitals, where medical care is reimbursed by Medi-Cal at rates of $100 to $300 per day -- higher than what nursing homes charge.

That will force the state to operate bankrupt nursing home facilities at a substantial loss. The state already is operating a bankrupt facility in Burlingame at a loss of $477,000 per month.

The tragic loss of life, family trauma and the fiscal hemorrhaging resulting from the proposed cuts to California nursing homes will make the energy crisis seem like a picnic. Who will provide the care? Think about it.