Discuss Effects of Policy Actions on Nursing Home Costs and Quality.
Nursing Facilities Competition Assignment Paper

Poor quality nursing home care is a problem in the United States, a problem that threatens the lives and well-being of one of our most vulnerable populations.Nursing Facilities Competition Assignment Paper The competitive structure of the nursing home market may influence the strategies and behaviors nursing homes pursue to capture the resources they need to operate. The goal of this study was to determine whether nursing home quality is related to the level and type of competition present in the market. This study specifically examined whether or not a relationship exists between structural, process, and outcome quality indicators, and (1) the availability of nursing home substitutes, (2) the threat of market entry, (3) the presence of rivalry in the market, and (4) the relationship between the nursing homes and their buyers and suppliers. This study examined secondary data from the Minimum Data Set Plus (MDS +), the On-line Survey Certification of Automated Records (OSCAR), the Area Resource File (ARF), and the Medicaid Reimbursement Survey. Weighted least squares regression analysis was utilized to estimate the relationships between the quality indicators and the different aspects of competition. This study found that some forms of competition are significantly related to nursing home quality performance. The availability of nursing home substitutes, the presence of active certificate of need laws, and the level of excess demand are associated with nursing home quality.Nursing Facilities Competition Assignment Paper

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Poor quality nursing home care is a problem in the United States, a problem that threatens the lives and well-being of one of our most vulnerable populations. The competitive structure of the nursing home market may influence the strategies and behaviors nursing homes pursue to capture the resources they need to operate. The goal of this study was to determine whether nursing home quality is related to the level and type of competition present in the market. This study specifically examined whether or not a relationship exists between structural, process, and outcome quality indicators, and (1) the availability of nursing home substitutes, (2) the threat of market entry, (3) the presence of rivalry in the market, and (4) the relationship between the nursing homes and their buyers and suppliers. This study examined secondary data from the Minimum Data Set Plus (MDS +), the On-line Survey Certification of Automated Records (OSCAR), the Area Resource File (ARF), and the Medicaid Reimbursement Survey. Weighted least squares regression analysis was utilized to estimate the relationships between the quality indicators and the different aspects of competition. This study found that some forms of competition are significantly related to nursing home quality performance. The availability of nursing home substitutes, the presence of active certificate of need laws, and the level of excess demand are associated with nursing home quality.

The long-term convalescent health-care industry in the United States faces three well-documented problems: (1) many indigent patients cannot gain access to nursing homes; (2) the quality of nursing home care is often suspect; and (3) the cost of this care is considerable and continues to increase at a worrisome pace.Nursing Facilities Competition Assignment Paper

The Medicaid program, which helps indigent patients gain access to nursing home care by directly reimbursing the homes, is the dominant purchaser of nursing home services in the United States.[1] Nursing home administrators argue that the Medicaid program can induce them to admit more Medicaid patients and provide higher quality if the program pays a higher rate of return on Medicaid patient care. RAND investigated this issue and found that increasing the rate of return on Medicaid patients would induce nursing homes to admit more Medicaid patients, but it would not induce them to increase quality.

Regulation and Nursing Home Behavior
The business of nursing homes is to provide patients with a package of commodities such as medical care, room and board, and social activities. Some of these services are devoted to rehabilitation and others toward lifestyle maintenance. Together these components constitute the quality of care provided to patients.Nursing Facilities Competition Assignment Paper

Nursing homes care for two types of patients: those who finance their care privately and those whose care is paid for through the Medicaid program. However, the sum of private-pay and Medicaid patients cannot exceed a level determined by regulation. A nursing home’s capacity is regulated by the Certificate of Need (CON) cost-containment program. The program attempts to control total industry expenditures by limiting the supply of nursing home beds. CON requires that before an existing home can be expanded or a new one built, the government must certify that the proposed facility is indeed “needed.” Thus the program effectively limits the capacity of existing nursing homes and new entries into the market.

It can be assumed that nursing homes provide private-pay and Medicaid patients with the same level of quality. This assumption follows from the legal restrictions that homes cannot discriminate in the provision of service based on source of payment, and that most nursing home services, such as nursing care, social services, and dietary services are jointly produced for both types of patients and exhibit economies of joint production. Thus, it is both legally and technically difficult to improve the level of services provided to private-pay patients without also improving them for Medicaid patients.

Homes charge private-pay patients what the market will bear; thus, private-pay demand is a function of price and quality. In contrast, homes receive a set Medicaid reimbursement rate for the care of Medicaid patients, and thus Medicaid demand depends only on quality, since Medicaid patients pay zero out-of-pocket expenses.Nursing Facilities Competition Assignment Paper

Because private-pay patients pay a positive price and nursing homes must supply the same level of quality to both types of patients, it can be assumed that quality must be above the minimum level at which Medicaid patients (who pay zero) prefer nursing home care to independent living. It follows, then, that there is considerable demand among Medicaid patients for nursing home care; and the study found that there are indeed long lists of Medicaid patients in hospitals waiting for nursing home openings. Most nursing homes operate well above 90 percent capacity; and in the New York State sample examined in this study, most homes had well over 95 percent capacity.[2]

In sum, the Medicaid program has created a “secondary market” for nursing home care, and CON restricts supply so that there is excess Medicaid demand. Homes charge private-pay patients what the market will bear and receive the Medicaid reimbursement rate for the care of Medicaid patients. The homes use price and quality to maximize profits as they compete for private-pay patients, knowing that they can always fill excess capacity with Medicaid patients at the Medicaid reimbursement rate.

Effects of Policy Actions on Nursing Home Costs and Quality
The study team used econometric modeling to examine a sample of 455 nursing homes in New York State. Since higher quality is produced primarily through labor-intensive activities such as personal contact with patients by employees and highly personalized physical and psychological therapy, policies designed to improve quality are relatively expensive. The modeling showed, for example, that a policy that increases quality 1.3 percent will increase cost by 10 percent. In contrast, cost-containment policies can achieve large savings without producing a large deterioration in quality.

The researchers examined the effects of two critical policies in the nursing home industry: competition and the return allowed on Medicaid patients. With respect to competition, the appropriate market to analyze is the private-pay market, since homes do not compete for Medicaid patients. The analysis showed that increases in competition are associated with higher levels of quality, since this is the way that nursing homes seek to attract more private-pay patients. However, restricting competition would have the effect of reducing costs, because the homes would not have to provide expensive quality improvements to attract patients away from competitors. In sum, increasing competition to promote quality would lead to more costly care, while restricting competition achieves considerable savings without a large sacrifice in quality.Nursing Facilities Competition Assignment Paper

In examining the second policy question, whether the government could purchase increased access to nursing homes for the poor and higher quality as well, the researchers found that there is a quality-access trade-off. Increasing the rate of reimbursement for Medicaid patients would induce nursing homes to admit more Medicaid patients, but it would not lead to higher quality of care, because improving quality is very expensive and is targeted toward the private-pay market.

For more than thirty years the quality of care in nursing homes has been a recurring matter of public concern and debate in the United States. In the 1970s and 1980s researchers presented compelling evidence that the frail and vulnerable recipients of nursing home care were too often neglected, mistreated, or abused and that the system of nursing home regulation and licensure was largely ineffectual, failing to protect residents and to prevent quality problems. 1 In 1986 the Institute of Medicine (IOM) published an influential report that set out detailed recommendations for reforming the regulation of nursing homes, intended to bring about a major improvement in quality of care. 2 Those recommendations were largely accepted by Congress, enacted through the Nursing Home Reform Act as part of the Omnibus Budget Reconciliation Act (OBRA) of 1987, and have since been gradually implemented by the Centers for Medicare and Medicaid Services (CMS, formerly HCFA). 3Nursing Facilities Competition Assignment Paper

It seems that the same quality problems that spurred calls for greater regulation in the 1970s and 1980s are still endemic in many nursing homes today. 4 Nursing home regulation remains the constant subject of policy attention, most recently via the Senate Special Committee on Aging, the Clinton administration’s nursing home initiative, and the U.S. General Accounting Office (GAO), which has issued a stream of reports. 5 The IOM has just revisited nursing home regulation as part of a wider review of long-term care and has concluded that while regulation has brought some limited improvements in nursing home care, further reform is still needed. 6

This paper briefly describes how nursing home regulation has developed in the United States from 1986 to the present and summarizes what is known about the impact of regulation on nursing home care. It then draws on the wider literature on regulation and its impact to outline some characteristics of nursing home regulation that may have detracted from its effectiveness and contributed to its rather disappointing results. The paper concludes that fundamental regulatory reform is needed but that greater attention should be paid to the lessons of regulation in other settings, and more use should be made of research and formative evaluation to improve the effectiveness of nursing home regulation.Nursing Facilities Competition Assignment Paper

The Development Of Nursing Home Regulation
More than 1.6 million Americans live in nursing homes, most of them elderly, frail, and vulnerable persons who are likely to live out the remainder of their lives there. Because of their physical or mental infirmity and their dependence on their caregivers, they are often not able to act as assertive, well-informed consumers. In 1999 the United States spent about $90 billion on nursing home care (about $55,900 per resident), and 60 percent of the cost was borne by states and the federal government through the Medicaid and Medicare programs. 7 The great majority of nursing homes (93 percent) are operated in the private sector, 67 percent of them by for-profit organizations, including a growing number of large corporations whose facilities house thousands of residents. 8

Concern about quality of care in nursing homes can be traced back at least to the 1950s. Before the establishment of Medicare and Medicaid in 1965, there were essentially no federal standards regulating nursing homes, regulation was left up to the states, and standards varied widely. Although federal regulations were enacted once Medicare and Medicaid began to pay for nursing home care, they were inadequate in design, poorly implemented, and often unenforced by the federal and state agencies that shared regulatory responsibility. A succession of studies in the 1970s and early 1980s highlighted continuing serious problems with nursing homes’ quality of care and were one reason that Congress asked the IOM in 1984 to investigate and recommend reforms. 9

The IOM’s 1986 report outlined proposals for a comprehensive and radical reform of regulatory arrangements. 10 The standards for nursing homes were to be revised to make them more focused on quality of care, more detailed and comprehensive in their coverage, and more explicit about the rights of residents. The survey or inspection process used to check compliance with the standards also was to be reformed, to make it less oriented toward paper records and structures and more focused on direct observation of care and communication with residents. A much broader range of enforcement mechanisms was to be introduced, including financial penalties, blocks on payment for new admissions or all residents, provisions to take over the management of failing homes, and ultimately termination of participation in Medicare/Medicaid. These reforms passed Congress with broad bipartisan support and were enacted as the Nursing Home Reform Act, part of OBRA 1987.Nursing Facilities Competition Assignment Paper

It took the CMS (then HCFA) three years to put into operation the regulations to implement OBRA 1987 and seven years to implement the regulations needed to put its regulatory enforcement mechanisms in place. Over that time political support for the OBRA 1987 reforms slackened, and although a number of proposals were brought forward in Congress in the mid-1990s aimed at repealing or weakening nursing home regulation, none were successful. 11 Even once the reforms were in place, a succession of GAO reports highlighted continuing quality-of-care problems in nursing homes and major flaws in OBRA’s implementation and the management of nursing home regulation by the CMS. In response, the Clinton administration launched a nursing home initiative in 1998 aimed at improving the effectiveness of regulation.

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The current regulatory arrangements are administratively complex but conceptually straightforward. The CMS is responsible for producing and maintaining federal regulations with which all homes that wish to participate in Medicare and Medicaid must conform. The state survey, licensing, and certification agencies are responsible for surveying or inspecting nursing homes to check their compliance with the regulations, investigating complaints, and reporting the results to the CMS. When deficiencies are identified, state agencies and the CMS regional offices share responsibility for taking enforcement action to make sure that nursing homes deal with the problems and come back into compliance. The CMS funds most of the costs of Medicare/Medicaid certification and oversees the performance of state survey agencies to make sure that the federal regulations are implemented appropriately. States also have their own licensing requirements, with which all homes (not just those participating in Medicare and Medicaid) must conform. State regulations may parallel or exceed federal requirements and generally have separate provisions for licensing nursing homes, undertaking surveys or inspections, investigating complaints, identifying deficiencies, and taking enforcement action.Nursing Facilities Competition Assignment Paper

Impact Of Regulation On Performance
Although numerous studies have examined the implementation of nursing home regulation and the management of regulatory arrangements, these reports are of limited help in determining what impact regulation has had on nursing home performance and the quality of nursing home care. 12 The impact of regulation has not been much researched, in part perhaps because it presents several methodological challenges. First, the absence of any control or comparison group (since virtually all nursing homes are regulated) means that one can really only study changes in quality over time and attempt to determine whether those changes can be attributed to regulatory interventions.

Second, much of the data available on the quality of care in nursing homes are the product of the regulatory process itself, which means that changes in the process affect the data and are difficult to distinguish from underlying changes in quality. For example, changes in the deficiency rates found in nursing home surveys over time or variations in these rates across states may result from differences in the stringency, scope, or implementation of the survey process or from real differences in quality of care, and it is not possible to disentangle the two. 13 Third, the reliability, validity, completeness, and timeliness of much of the routinely available data (such as the Minimum Data Set data collected on every nursing home resident and the Online Survey Certification and Reporting, or OSCAR, database of survey findings) have been questioned, and some caution is needed in using such data. 14Nursing Facilities Competition Assignment Paper

Residents physical condition.
Nevertheless, there is some evidence that the quality of care in nursing homes has improved greatly in many areas over the past ten to fifteen years and that at least some of that improvement has been brought about by the OBRA 1987 regulatory reforms. 15 For example, the inappropriate use of physical and chemical restraints has declined, as have rates of urinary incontinence and catheterization. Hospitalization rates also have fallen (which may be a good proxy for quality of care if poor care increases the risk of hospitalization). On the other hand, pressure sore rates have not changed; malnutrition, dehydration, and other feeding problems remain relatively common; and rates of bowel incontinence have risen slightly.

Industry changes.
Nursing home regulation also may have had effects on the nursing home industry. For example, in other settings it has been found that regulation favors larger, multi site corporations over smaller, single-site, owner-operated businesses, because larger organizations can spread the fixed costs of regulation across a greater business volume and are more able to develop in-house skills in regulatory compliance. 16 Over the past decade the nursing home industry has become increasingly dominated by major corporations, the largest of which control hundreds of nursing homes and many thousands of beds. This trend may reflect the economics of nursing home provision but also may have been accelerated by nursing home regulation.Nursing Facilities Competition Assignment Paper

Costs of regulation.
The costs of nursing home regulation are difficult to quantify. The CMS and the states spent $382.2 million in 2000 on running the state licensing and certification agencies that implement both federal and state nursing home regulations. This is only 0.4 percent of all spending on nursing home care and equates to about $22,000 per nursing home or $208 per nursing home bed. 17 However, these costs are probably only a small part of the overall costs of regulation, most of which fall on nursing homes themselves. First, nursing homes incur costs in dealing with the regulatory agencies, preparing for and hosting survey visits, gathering and providing data, responding to complaint investigations, and so on. Second, nursing homes incur costs when they are required to make changes to comply with the regulations. The experience of other sectors suggests that these interaction and compliance costs are probably greater than the regulatory agency costs outlined above, but there are no data available to allow these costs to be quantified. 18

Stakeholders debate.
Most stakeholders in nursing home regulation—such as the CMS and state survey agencies, nursing home providers, consumer groups, researchers, and independent governmental evaluators—would concur that the OBRA 1987 reforms have brought some improvements in the quality of nursing home care, but beyond that, opinions fall broadly into two camps. 19 Some think that because many quality problems still exist, regulation should be tightened with tougher standards and more aggressive enforcement, and they argue for more frequent inspections, more use of sanctions and penalties, and more uniform and rigorous application of existing regulations. Others believe that the current regulatory burden is already too great and that regulation has created a punitive, adversarial climate that is hostile toward quality improvement. They argue that regulation should be simplified and reduced, focused mainly on a smaller number of “problem” nursing homes, and reoriented toward a model based on cooperation and partnership between regulators and regulated organizations. There is little consensus among stakeholders about whether the benefits of nursing home regulation over the past decade outweigh its considerable costs. The debate has become polarized and politicized and, in the absence of robust empirical evidence on the effectiveness of regulation, is likely to remain so.Nursing Facilities Competition Assignment Paper

Learning From Regulation In Other Settings
A substantial literature exists on the use of regulation in a wide range of settings outside health care, including manufacturing industries, financial services, public utilities, and government agencies. 20 Although much research on regulation has been specific to particular countries, industries, or settings, a generic understanding of regulatory issues has begun to develop that offers many transferable concepts, models, and ideas. 21 However, it has been noted that most regulation tends to develop in isolation from similar regulatory initiatives or approaches in other settings, with little sense of a regulatory community able to share findings across sectors.

Over recent years a fast-growing literature has developed on regulation in health care, including the regulation of hospitals, managed care organizations, and the health care professions. 22 It appears that there is scope to make more use of this wider literature on regulation in health care and in other settings, both to review the progress of nursing home regulation to date and to influence its future development. To that end, I draw on this literature to outline six major problems in nursing home regulation and to explore how regulatory reform could improve the effectiveness of regulation in assuring and improving quality.Nursing Facilities Competition Assignment Paper

Problems Of Nursing Home Regulation
Deterrence, compliance, and responsive regulation.
Regulatory theorists often use two terms— deterrence and compliance —to describe the paradigms within which regulators work. 23 In brief, deterrence regulators see the organizations they regulate as “amoral calculators,” out to get what they can and willing to break the rules if they need to and can get away with it. As a result, their approach to regulation is formal, legalistic, punitive, and sanction-oriented. In contrast, compliance regulators see organizations as fundamentally good, well-intention ed, and likely to comply with regulations if they can. Their approach to regulation is generally more informal, supportive, and developmental, and they use sanctions only as a last resort. Each approach has different advantages and disadvantages.

For example, deterrence regulation is likely to achieve change more quickly and may be more suited to situations in which the regulator is dealing with large numbers of heterogeneous organizations. However, it is usually more costly and can provoke defensive behavior by regulated organizations, which subverts the objectives of regulation. On the other hand, compliance regulation is cheaper, may achieve more change in the longer term, and may work better when dealing with a smaller number of more homogeneous regulated organizations. However, it can be easily undermined or circumvented by regulated organizations if they are determined to do so.

In practice, regulators often make use of a mixture of deterrence and compliance approaches. Robert Kagan and Lee Axelrad argue that regulation is very much a product of the political, social, and economic environment and that approaches to regulation vary considerably among countries. 24 The United States is perhaps the foremost proponent of deterrence regulation and uses this approach in many fields in which other countries use compliance approaches successfully. 25 Kagan and Axelrad characterize the American tradition of deterrence regulation as “adversarial legalism” and assert that it has high costs, a divisive and corrosive effect on relationships between organizations, and few compensating benefits.Nursing Facilities Competition Assignment Paper

Before 1987, American nursing home regulators were much criticized for doing too little to deal with persistent poor performance and widespread, long-standing quality problems. While approaches varied from state to state, many used a compliance model in which education and persuasion were seen as the main tools for improvement. 26 As a result, it was argued, some nursing homes flouted the regulations with impunity, regulators did not have sufficient powers to deal with such offenders, and so the whole process of regulation was brought into disrepute. Since the implementation of the OBRA 1987 reforms, nursing home regulation has developed most of the features of deterrence regulation, with great stress placed on developing and applying formal, written regulations; undertaking inspections or surveys; recording deficiencies and issuing citations; and enforcing regulation through the use of sanctions such as civil money penalties, denials of payment, or decertification. It is therefore not surprising that it suffers the problems of deterrence regulation, such as strained relationships between the various players in regulation, a defensive and uncooperative response to regulation from nursing home providers, and high regulatory costs. Despite its overt deterrence orientation, U.S. nursing home regulation still seems to be ineffective at dealing with many problems of persistent poor performance. It is interesting to note that nursing home regulation in other countries is generally less deterrence oriented, as is the regulation of other types of health care organizations in the United States. 27

A number of regulatory theorists have argued in recent years for a more contingent or adaptive approach to regulation, and their ideas may have some relevance to the regulation of nursing homes. Called “responsive” or “smart” regulation, this approach seeks to find a more effective regulatory paradigm that combines some of the benefits of both deterrence and compliance regulation. 28 The main principle of responsive regulation is that regulatory methods and approaches should be adapted in response to the behavior of individual regulated organizations. A broad, graduated hierarchy of regulatory interventions and enforcement actions is used, and while most regulation takes place at lower levels, the regulator has the capacity and the will to use higher-level interventions and actions if need be. In this way, most of the benefits of compliance regulation—such as cooperation, information sharing, negotiated agreement, and low regulatory costs—are retained, but the powerful incentives and sanctions of deterrence regulation are still available.Nursing Facilities Competition Assignment Paper

At present, nursing home regulation exhibits few, if any, of the features of responsive regulation. Nursing homes are surveyed annually and treated similarly, regardless of whether they are good or poor performers—a “cookie-cutter” approach that neither adequately rewards good-quality care nor deals forcefully enough with poor-quality care. Nursing home regulators have little scope to use their discretion and professional judgment in applying the highly prescriptive regulations and are actually prevented by the regulations from giving nursing homes advice or assistance. It seems that there is considerable scope to make use of the ideas of responsive regulation to create regulatory arrangements for nursing homes that would be less focused on deterrence, more capable of monitoring and discriminating between nursing homes on the basis of their performance, and more able to tailor regulatory interventions to the performance needs of individual nursing homes. This might not reduce regulatory costs overall, and would mean investing more in regulating poor-quality nursing homes, but it would be a much better use of regulatory resources.

Regulatory fragmentation.
Regulation is sometimes fragmented, with different agencies responsible for different functions or performance areas and even some direct overlap of oversight. Regulatory fragmentation may result in duplication, an increased regulatory burden and higher regulatory costs, and some conflict or confusion between the requirements of different regulators. It also may weaken regulatory oversight, because no one agency has either all of the information needed to assess performance or complete responsibility for dealing with performance problems. 29Nursing Facilities Competition Assignment Paper

The regulation of nursing homes is fragmented in three ways. First, although federal responsibility rests with the CMS, it is split between the central agency and its regional offices, which deal separately with developing and promulgating regulations and setting guidance for state survey agencies, on the one hand, and with financing, contracting with and overseeing state survey agencies, and enforcing regulations, on the other. These responsibilities are only brought together at the level of the CMS administrator, and there is good evidence that this fragmentation causes communication problems and reduces the effectiveness of regulation.

Second, regulatory responsibility is split between the CMS and the state survey agencies, and the relationship does not appear to be an easy one, marked more by bureaucratic direction and dissonance than by real inter agency dialogue or collaboration. The CMS sets out in excruciating detail in its State Operations Manual what it expects state agencies to do, but those agencies struggle to fulfill their mandate in the real world within the resources that the CMS allocates to them. 30 State survey agencies have a dual accountability—to the CMS and to their state government—so conflicts can and do arise. The CMS is meant to oversee the performance of state agencies but has done little to monitor them and in any case has limited powers to do anything about performance problems.

Third, there is really not one system of regulation, but two—federal certification and state licensure—running side by side. This results in some duplication, occasional conflicts, and considerable confusion. For example, when state survey agencies find a deficiency at a nursing home, they may choose to pursue it through state or federal enforcement mechanisms, or both.Nursing Facilities Competition Assignment Paper

The current level of fragmentation creates unnecessary complexity for regulators and for nursing homes, probably reduces the effectiveness of regulation, and certainly increases its costs. These regulatory structures are an accident of history; they reflect the gradual and piecemeal development of state and federal regulatory arrangements since 1965. A simpler regulatory structure with one regulator would probably be much more efficient and effective. However, improvements could be made to the current system of regulation by simplifying and bringing together responsibility within the CMS and taking steps to develop a more proactive and productive relationship between the CMS and the state survey agencies.

Clarity and priority of the regulatory mission.
While some regulators are agencies established for the purposes of regulation, others undertake regulation as one of a number of related activities. There can be some benefits to integrating the regulatory function with other responsibilities, but the main disadvantage is that the clarity and priority of the regulatory mission may be compromised when the agency trades off regulatory objectives against other objectives. Regulatory organizations for which the regulatory mission is not clouded by a host of other competing non regulatory objectives (such as the Food and Drug Administration or the Occupational Safety and Health Administration) may be more likely to be effective regulators because they can focus on a clear regulatory mission.Nursing Facilities Competition Assignment Paper

Nursing home regulation is only one responsibility among many for the CMS and for the state government departments in which the state survey agencies are located. It competes for attention with a multitude of other policy priorities, and it tends to be seen as a rather unexciting, unglamorous, and low-profile function. In these circumstances, it is likely that nursing home regulation will always struggle to secure resources and gain sustained policy attention unless it is forced up the policy agenda by external influences such as pressure from consumer groups or independent evaluators. 31 This problem of prioritization may be one of the reasons why the implementation of the OBRA 1987 reforms proceeded so slowly (with the CMS taking seven years to introduce some regulations). Reorganizing responsibility for nursing home regulation within the CMS could help to provide greater clarity of mission, but putting nursing home or long-term care regulation in the hands of a separate agency would probably be the most effective way to ensure that the issue gets the attention it deserves. The same problems may exist at the state level, especially when nursing home regulation is one relatively small function of a much larger entity. It might not be feasible to have a separate state agency for nursing home regulation except in the largest states, but it would be possible to reorganize responsibility for nursing home regulation to give it greater visibility and policy attention.

Balancing independence and accountability.
Regulators have to be held accountable for what they do, and public regulatory agencies are generally made accountable by reporting, directly or indirectly, to an elected legislative body. However, regulators sometimes need to take actions that may be politically unpopular or that may arouse the opposition of important stakeholder groups, and in these instances they need some degree of freedom to act without interference. In any case, a regulator’s credibility with stakeholders may depend upon its perceived independence from sectional interests and its ability to act as a nonpartisan “honest broker.” Regulatory governance arrangements therefore need to provide a balance of accountability and independence.Nursing Facilities Competition Assignment Paper

Nursing home regulation has become highly politicized, and various stakeholders attempt to influence the regulators and to shape the legislative framework for regulation. For example, nursing home providers have made large political contributions; in some states nursing home providers are prominent in the local political party hierarchies; and some state and federal legislators have substantial financial interests in nursing home care. On the other hand, there are powerful, well-organized national and state consumer and citizen groups that often run influential campaigns. Legislators at both the state and federal levels have taken a close interest in the work of nursing home regulators, held hearings and commissioned reports from evaluators, and sought to influence both, either directly through new legislation or indirectly by controlling the resources made available to run the regulatory agencies. While this kind of attention may be an inevitable result of the political process, it does not necessarily make for effective regulation. Regulators working in the glare of political and public attention tend to be highly cautious, risk-averse, and over influenced by the likely political and public response to their actions. Although it is perfectly legitimate and desirable that providers, consumers, legislators, and other stakeholders should be involved in shaping the regulatory process, nursing home regulators need to be freed up to do their jobs without undue interference.

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Regulatory accountability is also an important guard against having the regulatory process be “captured” by any one sectional group or interest, most commonly the organizations that are being regulated. However, it can be argued that nursing home regulation has been captured, not by the providers but by the payers for nursing home care. The CMS and state governments act both as regulators of nursing homes and as funders (through Medicare and Medicaid) of 60 percent of the costs of nursing home care. If the CMS, as regulator, makes changes in the regulations that will cost money to implement, then the CMS, as funder, comes under pressure to increase reimbursements. The current debate about whether federal regulations should be amended to set minimum staffing ratios for nursing homes is an illustration of this problem. Some estimates suggest that federal minimum staffing ratios could increase the costs of nursing home care by $3–$15 billion a year, depending on where the minimum staffing level is set, and the nursing home industry has been quick to assert that Medicare and Medicaid should be ready to increase reimbursement levels accordingly. 32 While affordability is an important issue, and the costs and benefits of any regulatory changes should be carefully analyzed, it is probably unhealthy for the regulatory process to be so completely in the hands of a single interest group. A more balanced model of regulatory accountability might involve the separation of regulatory and funding responsibilities in state and federal government agencies and the provision of a formal role for a wider range of stakeholders such as consumer groups, provider associations, educators, and researchers in holding nursing home regulators accountable for their performance.Nursing Facilities Competition Assignment Paper

Regulatory alignment.
Regulation is most effective when the requirements or objectives of regulatory agencies are aligned with other influences on the behavior of regulated organizations. For example, regulatory compliance with environmental health standards among food producers is generally good, because the producers recognize that any major food-related disease outbreak can result in great harm to their commercial interests, such as loss of market share and damage to their public image and reputation. Alain Enthoven argues for a “pro competitive” approach to health care regulation in market situations, in which, as far as possible, the regulatory regime is designed to reinforce or complement existing market incentive structures or influences on regulated organizations. 33

However, for nursing homes, the pressures of the marketplace are not well aligned with the objectives of regulation. 34 While nursing home regulation attempts to promote high quality of care, the market does not seem to reward nursing homes that provide such care. First, restrictions on nursing home developments have weakened competition by constraining supply in many areas, even though occupancy statistics now suggest that there is some excess capacity overall. 35 Second, nursing home consumers (potential residents, their families, and caregivers) are poorly equipped with information to compare quality among nursing homes. Thus, their choices are often driven mainly by the proximity of the home to family members. Once they are residents of a home, their dependence on it makes it difficult to speak out about quality problems, and it is difficult for them to move if the quality of care does not meet their expectations. Third, the financial pressures on nursing homes from low rates of Medicaid reimbursement have driven many to reduce their spending to sustain their profits.

When regulatory objectives and market pressures collide, as they do for nursing homes, organizations will often attempt to reconcile the conflicting pressures, but ultimately the stronger market pressures are likely to prevail. For nursing homes, regulatory alignment might be improved if measures were taken to increase competition on quality grounds and to provide greater financial incentives to provide good-quality care. Regarding competition, initiatives that offer nursing home consumers much more information about the facilities when they are making their initial choice would be helpful, and some examples already exist. It also would be useful to make it easier for residents to change nursing homes. Regarding incentives, some measures of quality need to be incorporated into the complex prospective payment system for Medicare and Medicaid so that a proportion of reimbursement is dependent on the quality of care. This is not an easy task, but it is disappointing that past experiments with quality-based reimbursement have never been implemented widely, despite their promising results. 36Nursing Facilities Competition Assignment Paper

Regulatory tripartite.
The relationship between a regulator and a regulated organization is not simply bilateral. Many other stakeholders have an interest or involvement in the organization’s performance, and it has been argued that regulatory arrangements should be designed to make use of or co-opt these other groups for the purposes of regulation—an approach that is called tripartism. For example, workers in a manufacturing firm have a strong self-interest in good workplace safety arrangements, and so occupational safety and health regulations often require manufacturers to have some kind of formal employee involvement and representation in work-place safety structures and processes. In this way, workers and their representatives are brought into the regulatory process, where they can be an important source of information to the regulator and can help to promote regulatory compliance. Regulatory agencies have very limited resources in comparison with the organizations they regulate, and even the most intensive approaches to regulatory oversight are unlikely to involve regulators in inspecting more than a small proportion of the activities they oversee. Tripartism provides a mechanism by which regulators can extend their oversight by using other stakeholders as informants and can secure greater regulatory compliance by using those stakeholders to pressure regulated organizations to change.Nursing Facilities Competition Assignment Paper

Many formal and informal nursing home stakeholders have an interest in the regulatory process. Residents and their families hold perhaps the greatest stake in assuring good quality of care, but consumer and citizen groups, staff unions and associations, provider groups (including nursing home associations and corporate owners of chains or networks of nursing homes), and other health care organizations and professions (such as hospitals, social workers, and physicians) also interact with nursing homes, and a federally funded network of long-term care ombudsmen oversees nursing home care. 37

Current nursing home regulatory arrangements are mainly structured bilaterally, around the relationship between the regulator and the nursing home, and they make relatively little use of these other interest groups. While nursing home regulators do interview residents and staff as part of their regular surveys and will respond to and investigate complaints from any source, there is no formal regulatory requirement for any other stakeholder involvement. Regulators could make more use of tripartism by requiring nursing homes to have strong resident and family councils and providing more support for them; by providing more resources for the admirable but chronically underfunded long-term care ombudsman program and doing more to link it up with resident and family groups in nursing homes; by requiring nursing homes to have forums in which workers can raise quality problems and by safeguarding “whistle blower” employees who express legitimate concerns about quality; and by incorporating more extensive consultation with stakeholders into the nursing home survey process.

Nursing home regulation is clearly necessary, but not all regulation is good and effective. It seems that although the OBRA 1987 nursing home reforms have achieved some important quality improvements, there is too little evidence to be able to determine whether the benefits justify the costs. The current regulatory arrangements could be improved, and regulatory experience in other settings may offer some valuable insights. Even so, there is clearly a need for more research aimed at developing a better understanding of the costs and effects of different regulatory methods and so informing regulatory policy.Nursing Facilities Competition Assignment Paper

For the future, further regulatory reform for nursing homes is probably inevitable. The IOM has recently recommended a number of changes, including a greater focus on providers that are chronically poor performers (by using more frequent surveys and increasing penalties); more CMS monitoring of the regulatory process to ensure that regulations are applied consistently; and more research into whether regulation has sufficient resources.

However, it can be argued that more fundamental reforms to the current regulatory arrangements are needed that are less focused on changing the regulations and more concerned with reforming the regulators themselves and changing the culture of the regulatory process. For example, future reforms could include a shift toward a more responsive approach to regulation; changes to the structure of the CMS and the state survey agencies to reduce fragmentation, focus their regulatory mission, and improve regulatory governance; the alignment of regulatory and other incentives for nursing home providers; and the incorporation of a wider range of stakeholders into the regulatory process. Whatever changes are made, it is important that they be properly evaluated.Nursing Facilities Competition Assignment Paper

The Ongoing Struggles of the Skilled Nursing Facilities
With this refocusing within the industry, those health care companies with significant skilled nursing operations experienced financial pressures due to, among other things, competition from more attractive alternatives to the traditional skilled nursing facilities (i.e., CCRCs, ILFs and ALFs), aging facilities and a lack of resources to modernize, the ongoing financial pressures of Medicaid reimbursements, and the increased competition for competent staff. Many of these skilled nursing providers found themselves unable to effectively compete in the marketplace. Many lacked the financial resources to modernize facilities and expand services to CCRCs or ALFs or acquire such facilities in order to diversify their business. Creating a snowball effect, the skilled nursing providers are then unable to attract private pay and Medicare patients, more apt to choose CCRCs and ALFs, and are then unable to compete for staff due to inherent budget limitations. Altogether, the current climate in the skilled nursing care industry remains difficult for those companies with significant skilled nursing operations. Below, we discuss the various pressures facing skilled nursing facilities today.Nursing Facilities Competition Assignment Paper

Alternative Nursing Facilities
The emergence of alternative assisted living facilities is perhaps the single greatest pressure facing skilled nursing care providers today. In the early- to mid-20th century, only one true form of assisted living facility existed: the traditional skilled nursing care facility. However, in the late 20th century and now the early 21st century, new forms of assisted living facilities exist. These assisted living facilities provide a flexible level of care and more traditional lifestyle that is often unavailable at a traditional nursing home. These institutions have increased the competition for self-funding, financially viable patients. As the baby boom generation ages, its members often choose to move into CCRCs or ALFs and shun traditional skilled nursing homes. For those with the financial wherewithal, the home health care providers are yet another alternative to the traditional nursing facility.

Consequently, nursing home’s already dwindling market share has decreased even more. Due to the expansion of ALFs and CCRCs, the percentage of Medicaid patients at traditional skilled nursing facilities has increased even more, leaving skilled nursing homes with patients at low Medicaid reimbursement rates but high needs in terms of care. Therefore, skilled nursing facilities see their expenses rising with their revenue declining or, at best, remaining flat. Skilled nursing facilities that are part of a larger continuum of care community may be able to absorb these costs. Stand-alone nursing homes or companies consisting primarily of nursing homes are often unable to absorb these costs.Nursing Facilities Competition Assignment Paper

The Trickle-down Effect
To be profitable or at least break even, a skilled nursing facility needs to modernize its facility or expand the services to attract the proper mix of private pay, Medicare and Medicaid patients and to continue to increase or maintain patient census. With the advent of CCRCs and ALFs, many potential nursing home residents would rather move into these newer, more modernized facilities than suffer the stigma associated with living in “nursing homes.” Consequently, a “trickle-down” effect is created as the patient’s health deteriorates and more care is needed. Patients may start by paying the fees associated with a CCRC. As their health fails, they may move into an ALF that provides more critical and consistent nursing care. Finally, as their health fails altogether, they may finally be forced to move to a skilled nursing facility. For a CCRC, this model may work. But for a health care company with operations focused primarily or exclusively on skilled nursing homes, they are left to care for the sickest, most frail patients who require the most expensive care. The skilled nursing facility is left to depend on Medicaid for reimbursement. In order to absorb the costs associated with caring for a Medicaid patient, the nursing home must be able to attract a sufficient number of private pay and Medicare patients to subsidize the unpaid expenses.

Medicaid
One of the primary problems plaguing the nursing home industry continues to be Medicaid reimbursements—both the dollar amount and the timing. Medicaid remains the primary source of revenue within the skilled nursing industry. Consequently, any reductions in Medicaid reimbursements or delays in payment will likely have a dramatic effect on a skilled nursing facility’s financial performance.Nursing Facilities Competition Assignment Paper

In addition, Medicaid reimbursements are often increased or decreased with little to no warning. For example, in Illinois, from 1994 to 2002, the average costs at nursing homes increased by 51 percent.5 By contrast, Medicaid rates paid to the facilities only increased 29 percent.6 In 2002, Gov. George Ryan proposed a 8.8 percent reduction in Medicaid funding to Illinois nursing homes, totaling $171 million, illustrating the large fluctuations Medicaid can undergo at the behest of state regulation.7 Recently, Illinois increased the Medicaid rates by 6 percent, but Illinois facilities are still expected to struggle.

In order to counteract the financial impact of Medicaid in the nursing home market, skilled nursing facilities must modernize and expand their service offerings to increase the number of private pay and Medicare patients to offset the Medicaid losses. This requires a significant investment and a focused and aggressive marketing campaign for patients that is often impossible with the budgetary restrictions facing the nursing homes. With so much competition from larger and more diversified facilities, the skilled nursing facilities find themselves in the proverbial Catch 22, needing more Medicare and private pay customers, yet unable to compete for their business.Nursing Facilities Competition Assignment Paper

Staff for the Skilled Nursing Facility
Skilled nursing facilities also suffer from high overhead costs and the inability to hire and maintain their staff. Across the industry, there is a shortage of nurses. Consequently, while Medicaid reimbursements remain flat, decrease or increase at insufficient levels, the cost of caring for the patients increases, and the ability to find and keep nurses at these facilities is a difficult obstacle for the skilled nursing home.

Obsolete Facilities
Many skilled nursing facilities lack the modern amenities of a CCRC or ALF. While adult children increasingly seek first-rate, progressive homes for their parents, these nursing homes lack sufficient funding to modernize their facilities, again impeding their ability to compete for market share. Often, a potential client, given the choice of a modern, private CCRC or a skilled nursing facility, will not even consider the nursing facility.

Potential Options and Solutions
1. Partnership. One possible solution for a struggling skilled nursing facility is to partner with another facility or with a CCRC or ALF with skilled nursing needs. For example, if a nursing home has a small market share in a particular community, it could acquire or combine with another facility in that market. The combined facility may form one profitable entity.Nursing Facilities Competition Assignment Paper

2. Creating a Core Business. Some skilled nursing facilities may have particular programs or areas in which they excel. In order to sustain financial viability and assuming the facility can operate these programs profitably, these facilities should identify those areas in which they are particularly strong, place the bulk of their financial resources in those areas and aggressively market their strengths. For instance, a facility may have a strong Alzheimer unit. In that case, the facility may realize greater profits in marketing itself as a renowned Alzheimer care facility, rather than simply a general care facility. If such changes are made to program offerings, the facility will necessarily reduce other programs that are not profitable, but will have to expend resources to obtain sufficient staffing for the new program (or focus of the facility). If the economics of the program and the marketing for the program are successful, the facility’s census and profitability should increase.

3. Modernization. As discussed above, modernization and program expansion requires significant financial resources. Skilled nursing facilities must take an aggressive, proactive approach to raising money for capital improvements and expansion of services in order to create a more competitive facility. In particular, communal living arrangements must be eliminated, no longer representing a viable alternative to private care afforded by CCRCs, ALFs and through HHPs. Without such capital infusions, many nursing facilities will lack the essential elements necessary to compete with those facilities with modern amenities offering a broad range of services.

4. Market, Market, Market. Skilled nursing facilities must aggressively market themselves within their geographic region. Such a marketing campaign will require a thorough strategy, financial support and sufficient resources to proliferate the information. Without actively promoting the product throughout their communities, these facilities will fail to compete with the more diversified CCRCs, ALFs and HHPs.Nursing Facilities Competition Assignment Paper

Predicting the Future
The health care industry continues to be both a growth area and a challenge—particularly for skilled nursing facilities. In recent times, the nursing home industry has expanded to include CCRCs, ALFs and HHPs. While many national entities have endured financial hardship, some have survived through a recreation of their businesses into more modern-day alternatives such as CCRCs and ALFs. However, many health care companies with operations focused primarily or exclusively on skilled nursing facilities often lack the resources and infrastructure to undertake such restructurings. Consequently, most private pay patients flock to the CCRCs and ALFs, leaving the skilled nursing care facilities with primarily Medicaid patients, which typically bring low reimbursement rates and high care requirements. In order to survive in this new, highly competitive market place, skilled nursing homes must obtain the capital necessary to modernize their facilities and expand services in order to attract an appropriate payor mix and maintain or increase the patient census.Nursing Facilities Competition Assignment Paper

Many of the more successful health care industry players reinvented themselves by shifting their focus from traditional skilled nursing facilities to CCRCs, ILFs and ALFs. By shifting focus from historically money-draining ventures such as skilled nursing facilities to more profitable services such as CCRCs, ILFs and ALFs, many providers have been able to attract investors, improve their facilities and return to financial growth. Nevertheless, with the continuing struggles and uncertainties within the health care industry, particularly in skilled nursing, we can expect additional bankruptcy filings and restructurings involving the smaller skilled nursing facilities.

There is no question that automating key operational aspects of your skilled nursing community will yield an almost immediate positive impact. We are seeing automated solutions flowing into every corner of senior care – from back end EHR systems to sensor technologies to medications dispensaries.Nursing Facilities Competition Assignment Paper

The operational impact these solutions make is, in many ways, obvious. As an example, solutions such as the InSite® System from Talyst have helped create a medications management environment that greatly reduces manual workflow. By doing so, nurses and other skilled support staff can concentrate on providing a higher quality of care without setting aside their precious time to conduct this tedious, error prone task.

Operational efficiencies aside, there is a growing marketing advantage to those owners and operators who are able to demonstrate technology innovation within their facilities. Here are three ways senior care operators can use technology to compete:

Higher level of care: Technology that frees up staff enables them to spend more time with residents. It also sends a message to the team that you value their time enough to take tedious, error prone tasks off their backs. The result is a team that is making use of their skills and able to provide higher quality of care. Mobile technology, medications management, electronic health records (EHR) are good examples of using automation to help provide better, more focused care.
Safer, more secure environment: For adult children making the decision to admit a loved one to an assisted or skilled nursing community, safety is one of the top differentiators. The families of residents will undoubtedly check your published surveys and reviews to determine how safe your environment is. When memory care is needed, safety issues become even more important. Sensor technologies have become highly sophisticated, some now using a GPS location infrastructure to enable freedom of movement for seniors with the assurance that staff will know where they are, at all times. Being able to demonstrate this to prospective residents and their families provides that peace of mind and assurance that the staff will be looking after their loved ones.
Improved communications: Today’s residents and their families have an expectation that they will be able to continue to use tools they are familiar with to communicate with staff and with their loved ones. Today, many seniors are using iPads, notebooks and smart phones to communicate. So, WiFi, of course, is a must. Technologies that enable seamless communications between staff, residents and family are being used to differentiate communities and give them a “leg up” over the competition.Nursing Facilities Competition Assignment Paper
What are you doing in your building to utilize technology to give your community a competitive edge? How are you using technology to attract and retain the best and brightest talent in a world with a shrinking workforce? Technology must be taken into serious consideration, not only for operations efficiency, but by your marketers and sales people as they work to increase occupancy in your organization.

Nursing Home Marketing Guide

Nursing homes can be solemn places. They shelter the sick. They house the elderly. For many, it can be a place of desperation. Yet, nursing homes offer much more than that. They entertain residents. They comfort them. They bring joy to their lives through community.Nursing Facilities Competition Assignment Paper

You need to emphasis the positive aspects of your nursing home. Crafting a strategic marketing approach will ensure your facility stands above the rest. This is important too. Competition in the nursing field is fierce. Many others will say they can offer the same services. Use solid marketing practices to differentiate your home. In the sections below, we offer a guide to nursing home marketing. We show you how to paint your home with a different brush!

Benefits of a Nursing Home
Challenges of Marketing Nursing Homes
Strategies for Marketing Nursing Homes
Nursing Home Marketing Resources
Benefits of a Nursing Home

With all the flak that nursing homes get, it can be hard to figure out why someone would go there. Why should you move one of your loved ones into a home? Many people can’t answer this. To solve that question, let’s first identify what a home be. At its core, care facilities offer community and service. They give the sick and old a place to connect. They also give them the medical and other care they need. Now, let’s go over some of the specific benefits of nursing homes in detail.

Supervision. Sometimes it’s just good to have another set of eyes watching over your loved one. That’s what you get with a nursing home. Lots of staff are dedicated to monitoring residents. This is especially helpful when someone living there has Alzheimer’s or dementia.
Immediate Assistance. For all of life’s daily chores, nursing homes supply help. Your loved one might need a hand with dressing, eating, or moving around. Nursing homes are ready to offer a hand of friendship and support for those tasks.
Meals. Nursing homes provide residents with all meals, snacks, and drinks. Plus, they do this in consultation with their dietician. This can be really helpful when residents have complex health problems. Home staff can align those issues with the proper diet to make sure they’re living well.
Health Care. Entering a nursing home means direct access to health care. Nursing homes have nurses and other medical professionals on staff to take care of residents. Plus, they can coordinate with other providers should your medical needs require further assistance. Combine this with 24-7 support and your loved one’s health will be in the best possible hands.
Social Life. Moving into a nursing home shouldn’t put your social life on hold. Joining many nurses means entering a world of life-minded people. You might find their company fulfilling. You might also enjoy the many social events that facilities hold.
This sampling clearly displays the benefits of nursing homes. All in all, they help shift the burden of care from families to qualified professionals. Yet, marketing their appeal still has its hurdles. We review those now. Then, we offer strategies to surpass them and push your nursing home to the top!Nursing Facilities Competition Assignment Paper

Challenges of Marketing Nursing Homes

We’ve all seen the headlines. Every day, naysayers and critics take cheap shots at nursing homes. It might hurt. It doesn’t mean they’re right. Here are some actual challenges that might slow your nursing home marketing approaches.

Nature of the work. Nursing homes help people that are in tough straits. They might not want to be there. Plus, homes give advanced care. It can be difficult to translate this into palatable and pithy slogans. Nursing home work is substantive, changing, and complicated. If you can paint your home as a partner for those in need, you might do better.
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Litigation. Plaintiffs attorneys have been on the hunt for nursing home cases. Over the last few decades, we’ve seen an explosion of these lawsuits. This taints all of your marketing efforts. The other side spends its time demonizing your work. Then, they try to profit off of that character assassination. To curb its effect, work with your legal counsel to minimize their success in court.Nursing Facilities Competition Assignment Paper
Government action. States may limit the way in which you reach out to clients. This is due to the fact that you provide professional care. You can’t market it in a dishonest manner. Thus, work to ensure that your marketing aligns with best practice. Don’t put your nursing home marketing in jeopardy!
These are just some of the challenges you might face marketing your nursing home. Now, we want to offer some tips to overcome them. They’ll help you reach your business goals!

Strategies for Marketing Nursing Homes

We reviewed the challenges. Now let’s talk strategy to beat them. There are some tried and true methods to structure nursing home marketing. Take a look at these ones. They’re some of the best.

Build Trust. You need to establish trust with families. This starts long before they go through the doors of your home. Luckily, the internet lets you do that at scale for cheap. Form profiles and interact with potential clients. Do this in a meaningful way. Speak on relevant matters. Answer their questions. Point out things evolving in the nursing home industry. This will build trust that will pay dividends in the future.
Build Reputation. To stand above other homes, build your reputation. Lots of media and governments outlets want analysis on nursing home issues. Offer comment on lawsuits or new laws. It’s cheap but easily gives you a competitive advantage. Also, most times, you’ll get a plug back to your website. In that sense, it’s free advertising.
Build Followers. It’s important to get offline and meet people in your community. Host events at your nursing home on critical matters. Send reps to local meetings to give expert insight. This will give your nursing home a real following. Your marketing campaign will rise above others that are merely online.
Tailor these nursing home marketing techniques to meet your needs. Add on to them for added effect. Work with professionals to make sure they hit your intended audience.Nursing Facilities Competition Assignment Paper