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Population Increases, More Elderly Residents Challenge California Nursing Homes

People keep moving to California. And then they get old.

For the state’s nursing home industry, those two facts loom large.

If current growth patterns continue, California’s population by 2035 will approximately double to 64 million. California’s annual growth rate of 2% — almost double the national rate of 1.1 percent — is fueled primarily by a high immigration rate as people from other states and countries arrive every day.

And every day, they’re getting older. The much-chronicled baby boomers — the largest generation ever conceived in the United States — will be retiring and needing increasing medical and social attention as the early decades of this century unfold. The youngest boomers turned 40 this year and the oldest are approaching 60. The U.S. retirement-age population will increase by 102% to 70.3 million in 2030 from 34.8 million in 2000.

What California’s nursing homes are doing now is only a warm-up for what’s to come.

Many players predict issues surrounding the aged — where the frail elderly live, how they’re treated and how it’s all paid for — will become a larger blip on California’s health policy radar screen as the population ages.

Under the state’s current nursing home funding system, California’s nursing homes have struggled to keep up with rising costs and increasing patient loads over the past couple decades. Until this year, there has been little government movement to improve the situation.

Report Finds Some Improvements

According to an analysis released Dec. 1, the nursing home industry shows signs of improvement in California over the past three years but still needs help.

University of California-San Francisco researchers found that quality varies widely among the state’s nursing homes, home health agencies and hospice programs, all of which are inspected for compliance with state and federal quality regulations. Failure to comply with regulations or standards results in the issuance of a deficiency.

Basically, fewer deficiencies means high quality, researchers say.

Nursing homes can be divided two ways: facilities connected to or associated with acute care hospitals vs. freestanding facilities; and for-profit facilities vs. not-for-profit. California has approximately 1,400 nursing homes, about 1,200 of which are freestanding. Roughly 200 are affiliated with acute care hospitals. The vast majority of freestanding facilities — more than 1,000 — are for-profit enterprises. About 160 freestanding nursing homes are not-for-profit. Nursing facilities attached to hospitals are predominantly not-for-profit, following roughly the same breakdown as hospitals in the state. About two-thirds of California hospitals are not-for-profit institutions.

Based on a review of the most current publicly available information, UCSF researchers found that:

  • Hospital-based nursing homes have more than double the average staffing levels of freestanding facilities.

  • About 31% of California’s freestanding nursing homes failed to meet the state’s minimum staffing standard of 3.2 nursing hours per resident per day, down from 50% in 2001.

  • Staff turnover rates averaged 64% in 2003, down from 84% in 2000, meaning that about two-thirds of the staff in an “average” nursing home leave every year. The actual turnover rate at nursing homes ranges from 8% to 258%.

  • Although average nurse staffing hours increased between 2000 and 2003, increased hours from licensed practical nurses and nursing assistants accounted for the change, while hours from registered nurses declined.

The UCSF study was financed by the California HealthCare Foundation, which this week relaunches, a Web site providing consumers with independent information on the state’s 1,400 nursing homes.

“While these findings indicate some progress, the number of homes with high turnover rates and low staffing is still too high,” lead researcher Charlene Harrington from the UCSF School of Nursing said.

According to Harrington, research has shown that RN hours have the most direct relationship to quality of care, meaning that “a decrease in their hours can have a negative effect on the quality of nursing home care.”

“Basically 93% of the facilities are not meeting the recommended staffing levels,” Harrington said. “The quality is very disappointing in many nursing homes in the state. Although some of that is related to the payment by Medi-Cal, many nursing homes are trying to make profits by cutting staffing and services, which leads to poor quality,” Harrington said.

Help on the Way?

California’s 40-year-old funding mechanism that helped the nursing home industry move into the 21st century is about to give way to a revamped, federally assisted program.

“It’s not a second too soon,” Betsy Hite of the California Association
of Health Facilities
, a trade group representing long-term health care providers, said. “The nursing home industry was not in very good shape in California. This will help it get strong again.”

The Nursing Home Quality Care Act, signed into law this fall by Gov. Arnold Schwarzenegger (R), will overhaul California’s nursing home funding system, bringing in millions of dollars in federal support and holding nursing homes accountable for quality care.

The new law takes effect Jan. 1, 2005.

Under the current system, Medi-Cal pays a flat rate to nursing homes for resident care, regardless of a resident’s health care needs.

The new system approved by legislators in AB 1629 by Assembly member Dario Frommer (D-Glendale) provides incentives for nursing homes to increase staffing and improve nursing home facilities for more than 120,000 seniors and people with disabilities while promoting accountability for spending on quality care.

The new reimbursement system will be financed by a tax on nursing homes, called a “Quality Assurance Fee.” In part because of this funding change, the federal government will provide about $900 million more in matching funds for California over the next four years. At least 23 other states have similar fee programs aimed at expanding eligibility for additional federal matching funds under Medicaid.

Concern Among Some in the Nursing Home Industry

Although most industry players welcome the new funding system, not everybody is convinced it will be a long-term solution.

“The flat-rate system the state has used is definitely flawed,” Anne
Burns Johnson — president and CEO of the California Association of Homes and Services for the Aging, which represents the state’s not-for-profit nursing homes, long-term care centers and affordable housing providers — said.

“But this system we’re moving to is totally dependent on federal matching money. If that goes away, the state will be left holding the bag,” Johnson said. “It’s not like the federal government is flush with money, and the Bush administration has been very clear about not wanting to add to the federal government’s Medicaid burden.”

Michael Moreno — associate state director of AARP, which “vehemently opposed” AB 1629 — said the new law sets a dangerous precedent.

“This is the first time in the history of the state of California that the government has passed a law guaranteeing businesses a profit,” Moreno said. “This law guarantees a base profit of 5% so it’s no wonder the private nursing homes think it’s a good idea.”

“And so far, there’s no real language that spells out quality of care and establishes accountability,” Moreno added. “We’re going to be working with the state to make sure that language is included before the law goes into effect.”

Johnson said the nursing home and long-term care industry “needs to be looking at very different systems … ways of caring for frail elderly that don’t depend on institutionalization. Our future depends on creating choices for people, offering options that include staying at home, assisted-living centers and other possibilities.”

“And as a funding system, I don’t think a provider tax is good long-term policy,” Johnson said. “It’s a policy that is in some ways a shell game, moving money around and hoping the federal government will match it.

“We need to think and plan beyond that kind of approach,” Johnson said.

Many long-term care and nursing home experts agree the system needs fundamental change both in financing mechanisms and overall intent “but the problem so far has been nobody’s willing to give up their turf,” Johnson said.

She does see potential for change, however.

“Some people — (Health and Human Services Agency Secretary) Kim Belshe and Patty Berg (D-Eureka) in the Assembly — are showing some interest in new approaches,” Johnson said.

“We’ll see what happens.”

Related Topics

Insight Insurance Medi-Cal Public Health