Seniors have multiple housing and care options available to them in various stages of existence, whether they’re emerging, developing, or have been around for some time. Considering this, it’s not surprising to learn that as assisted living has grown and evolved in the past two decades, it has had a “modest but significant impact” on who uses nursing home care and how it’s paid for, according to a recent study published in Health Services Research.
While it might make sense that if more people are moving into an assisted living community, less are going to nursing homes, the study makes a key observation: nursing homes’ private pay census—often used to subsidize Medicaid residents, along with Medicare reimbursements—is shrinking as well.
Nursing home occupancy declined from 93% in 1977 to 87% in 1995, and still further to 83% in 2003. During this same timeframe, the acuity levels in nursing home residents rose. The researchers found that a 10% increase in assisted living capacity led to a 1.4% decline in private-pay nursing home occupancy, and a 0.2–0.6% increase in patient acuity.
However, while assisted living communities and nursing homes do compete with each other to a certain extent, people who go into nursing homes generally need a higher level of care than those who go into assisted living. The fact that a majority of nursing home patients use Medicaid, while a majority of assisted living communities only accept private payers, further lessens the pool of people who are eligible residents for both.
“Given that assisted living has relatively little Medicaid coverage and is not a substitute for Medicare-ﬁnanced post-acute nursing home care, we would not expect the emergence of assisted living to have an effect on the number of Medicaid or Medicare nursing home residents,” said the researchers.
There is still a market for nursing homes, as research did not find a significant association between assisted living growth and the likelihood of nursing home closure. However, considering other factors such as Medicaid payment freezes, high liability insurance costs, and a shortage of registered nurses, researchers believe the nursing home sector faces an “uncertain” future. “In the short-term, facility closures and consolidation will likely occur in many markets,” they wrote.
Access the full study, “Assisted Living Expansion and the Market for Nursing Home Care” here.
Written by Alyssa Gerace