Is the cost of nursing homes competitive?

There are many different types of nursing homes so the cost varies depending on the services offered. An average cost is between $50,000 and $60,000 a year. Most insurance companies do not pay for nursing home care. Medicare pays for short term care in only certain circumstances. Medicaid pays in some states. The cost of a nursing home is a challenge. It is best to check all options in your area before making any type of decision. The following are some of the different types of care offered by facilities. 

• Independent Living: This type of facility is for someone who can take care of daily needs but may need someone to check-in on them at different times. This may be considered a retirement home or community.
• Assisted Living: As the name implies, this type of facility is for someone who needs assistance completing daily living activities. Usually, each person has their own apartment but can join others for meals if they chose.
• Intermediate Care: This is some who also needs some assistance from nursing staff.
• Skilled Nursing: Skilled nursing home is another name for the traditional nursing facilities. Medical nursing service is provided for those with serious illnesses or disabilities twenty-four hours a day. These facilities have state and federal licenses.
• Hospice Care: Hospice care is an infusion of home care and facility care provided to benefit terminally ill patients and support their families through their tough times.
• Respite Care: This aid is offered only on a temporary basis. Respite care allows the primary care giver or family member relief for a few days or even just a few hours.

Competition, as we typically recognize in business, does not apply to older adult medicine, in general. Nursing homes offer little exception. Competition is lost when the government is responsible for payment and reimbursement is the same regardless of quality or caliber of providers. Because Medicare covers early post-hospital reimbursement in the nursing home, these institutions are often more concerned with performing well on state surveys to avoid financial penalty than in improving quality to get any financial advantage (beyond being attractive enough to have people chose their facility often enough to keep their beds filled).

Because long-term stay residents often have stays covered by a combination of government-based reimbursement schemes (Medicare and Medicaid) there is no competitive advantage for reimbursement beyond attracting residents to a facility in the first place. Better quality doesn't directly translate into better reimbursement.

There are nursing homes that depend predominantly on private pay residents. These facilities are almost always more attractive and strive to offer an obviously better product. These are competitive in the traditional value-based consumer arena. They are also competitive in filling beds in markets where other facilities traditionally compete for those types of nursing home residents.

Most states require a certificate of need (CON) in order to have beds available for patients. CON limits competition and, many people would argue, limits quality.

The short answer to the question then is, "Yes. There is competition in some geographic areas for patients to fill beds. Otherwise, there is little competition in the traditional sense of free enterprise in America."

The other fact that limits competition is the inability to adequately compare services and quality of service from one facility to another, before entering the system. Studies have shown that comparative websites and scoring systems fail in this arena and probably steer many ignorant consumers into situations that fail to meet expectations.

They are competitive in relation to each other. That is the cost of nursing home care averages the same amount from facility to facility. It is more important to understand how care is reimbursed. If you are hospitalized for three consecutive days and then sent to a nursing home for a stay related to your hospitalization, Medicare will pay for a certain amount of days and depending on your plan you may have a certain deductible to pay as well.

Otherwise, unless you have long-term care insurance, the usual scenario is that you pay out of pocket until you "spend down" your assets and qualify for Medicaid. That is how the bulk of residential nursing home care is paid for. Keep in mind that the nature of homes is changing as well and you may find yourself in one rehabilitating from a hip or knee surgery. In that case, private insurance or Medicare probably will be covering you.

Also, assisted living facilities are morphing into nursing homes as more states allow aging placed in assisted living. These places cost less but are typically not covered by insurance unless again you carry long term care insurance.

The cost of a nursing home can greatly vary depending on several different factors, for example, types of services provided, medical needs, amenities, location, room size, etc. So the cost of nursing homes can range from moderate to the very expensive. It is important to utilize a nursing home that is within budget as well as provides all of the necessities for the patient. 

Here is a link that has some very useful information:

http://www.skillednursingfacilities.org/articles/nursing-home-costs.php