SIC 8059
NURSING AND PERSONAL CARE FACILITIES, NOT ELSEWHERE CLASSIFIED



This classification covers establishments primarily engaged in providing limited nursing and health-related or personal care to individuals who do not need the degree of care and treatment that a skilled or intermediate care facility provides.

NAICS Code(s)

623311 (Continuing Care Retirement Communities)

623110 (Nursing Care Facilities)

Industry Snapshot

Facilities in this category are used mainly by the elderly and to a much lesser extent by psychiatric patients and the mentally retarded. These individuals may be healthy or require only a minimum of nursing care such as the administration of medicine or supervision of self-administered medications prescribed by a physician. These live-in facilities run the gamut from nursing homes and board-and-care facilities to affluent retirement villages. Convalescent homes for psychiatric patients and group homes for the mentally retarded also fall in this category. Nursing homes in this category are classified as residential care facilities, but some are housed in skilled or intermediate nursing homes. Assisted living, congregate care, domiciliary care, and other arrangements also are in this classification.

Residential care facilities represent the second largest component of health services in this country because of the need to provide care for the growing number of elderly, but the concept of the nursing home is becoming outdated as a place for residential care. It has "become out of sync with the needs and expectations of our elderly population who require long term care," wrote Martins S. Valins in Nursing Homes. Valins is an architect specializing in the design of long-term care. He adds that "the root cause of the problem is that nursing homes were originally conceived out of a hospital model of care—an environment best suited to short-term medical treatment. Only recently did the nation begin to distinguish old age from illness. Becoming old does not necessarily imply that one will become ill or need constant medical supervision."

One of the most significant associations in the industry, the Assisted Living Federation of America, was founded in 1991 as the Assisted Living Facilities Association of America. The non-profit organization is a trade association devoted to the assisted living industry and the population it serves, and is comprised of more than 6,000 members, including providers of assisted living; state associations of providers; and others interested in promoting awareness, standards, and the interests of the industry. The American College of Health Care Administrators (ACHCA) is a professional society for 6,300 administrators in long-term care, assisted living, and subacute care. The ACHCA's mission to be "the premier organization serving as a catalyst to empower administrators who will define professionalism throughout the continuum of care." The American Health Care Association (AHCA) is a federation of 50 state health organizations and represents nearly 12,000 non-profit and for-profit assisted living facilities, nursing facilities, and sub-acute care providers.

Organization and Structure

While this category consists of group homes for the mentally retarded and convalescent homes for psychiatric patients, the largest segment and fastest growing area was the assisted living component. "Nursing and personal care" are frequently lumped together in statistical charts under nursing homes in general. This broader category was a $11.1 billion industry in 1996, up from $2.8 billion in 1990. As a bundled group, it contained 1.75 million workers in November 1996, an increase of about 46,000 from November 1995.

The projected population of those 65 and older was expected to increase to 35 million by the turn of the twenty-first century, and to 40 million by 2010. More than 6,000 Americans turn 65 each day. The increase in the 85-plus population was predicted to grow by 94 percent in the next 25 years compared to a general population growth of 25 percent, according to Jonathan Goldman in a special supplement on health care in the Institutional Investor. Life expectancy for those who have reached 85 has increased 24 percent from 1960 to 1990 and was expected to increase another 44 percent by 2040. A growing percentage of those over 65 were employed from 1990 to 1995, and there was an increase in those 75 and over who were living alone.

More than 1.5 million persons spend between $10 billion and $15 billion annually to live in 40,000 assisted living communities in the United States. The assisted living industry was expected to grow from $8 billion to nearly $25 billion by the new millennium.

Assisted-living free-standing residences are easy to build and less risky than other entries into the retirement market, according to 80 percent of the respondents to a survey of 326 senior housing executives published in Commercial Investment Real Estate in 1995. They also require less capital investment and lower operating costs.

It was estimated that between one-fourth and one-half of nursing home residents could be in assisted-living at substantially less cost. With 90 percent of assistedliving funds coming from private individuals, nursing homes could house only Medicare/Medicaid patients. Average costs for assisted living are $60 per day versus $80 to $100 for nursing homes. Nearly all assisted-living expenses are funded privately. However, 46 percent of all persons leaving assisted care do enter a skilled nursing facility.

Assisted living can provide a sense of independence and dignity. One of the problems is that Medicare or Medicaid funds nursing home stays, but does not cover assisted living. In some cases, this may foster upgrading or overstating a condition to become a nursing home resident. Oregon passed legislation allowing unlicensed staff to perform selected nursing duties. This has cut assisted-living costs to two-thirds of those for nursing homes. The primary objective of managed care is to move patients to the most appropriate and least expensive level.

During the first half of 1994, more than 25 assisted living retirement facilities with a total value of $400 million were financed by Real Estate Investment Trusts (REITs). The evolution of national assisted living chains have accelerated the role of REITs.

In the past, residential nursing care for the elderly was not reimbursed by payments from Medicaid, the federal and state health care insurance for low-income individuals. However, many states are seeking waivers so that Medicaid can fund a variety of residential care settings.

Residential care units often exist in skilled or intermediate nursing facilities that are funded primarily by the government. Every state has its own licensing regulations and its own methods of enforcing regulations. About 68 percent of total nursing home expenditures in 1997 were funded by Medicaid. Private insurers paid for 23 percent of costs. Assisted living facilities have higher operating margins because they are developed with private capital and their clients pay privately, allowing them to adjust charges accordingly.

Total nursing home industry revenues were estimated at $74.3 billion in 1993, most of it from government reimbursement for patients requiring skilled or intermediate level nursing care. During 1997, there were approximately 17,000 nursing facilities with 1.8 million beds. The industry was projected to increase to 2.2 million beds by the turn of the new century. According to Social Security Administration projections, the number of individuals 75 and older will increase by 31 percent between 1991 and 2010.

There is a continuum of care among the types of facilities in this category, ranging from retirement villages and assisted living arrangements to nursing homes. Retirement villages offer gracious living in private homes or town houses, often with hotel-type services and recreation. Many of these developments offer medical backup, medical alert systems, and sometimes a connection to a nursing home. The most expensive retirement villages offer continuing care and a guarantee of increasing nursing care as needed for life. Less expensive retirement communities provide only short-term nursing care. More and more facilities offer a choice of care in a campus setting or in different wings of the same building.

Assisted living is based on the European model of residential long-term care. Residences are in homes, apartment buildings, or studio or one-bedroom apartments. Transportation, housekeeping, meals, personal care, and often other services such as adult day care, vision clinics, rehabilitation programs, and health promotion centers are provided. The number of such communities nationwide increased during the 1990s from 277 to 1,000.

Congregate-care facilities offer residents considerably more independence than nursing homes and board-and-care homes. Congregate-care arrangements provide residents with small, private-living quarters, access to a shared kitchen and/or prepared meals served in a common dining room, but offer less medical and health related assistance assisted-living care.

Some elderly individuals live in subsidized housing units built by nursing homes, on the nursing home grounds, through a U.S. Department of Housing and Urban Development program. Though these arrangements offer access to some nursing home services such as medical screenings and meals, they often do not include nursing care.

Residential-care nursing offers a supportive and protective living environment for ambulatory residents, usually those older than 50, who have difficulty taking care of themselves but who do not require skilled nursing on a routine basis. Medicare has not paid for those in residential care, nor has Medicaid, though attempts are underway to change this. Medicaid traditionally has gone to licensed nursing homes providing skilled or intermediate care.

Increasingly, many facilities are choosing to offer a combination of all of these services, enabling residents to move through the system as needed. At the Ida Cuber House in the state of Washington, many options are available and there is considerable movement within the facility. Some residents want a permanent home and the option of progressing through levels of care as needed. Others are admitted for short-term stays and are expected to return to their homes.

At the Ida Cuber House, the nursing care center and assisted living program accommodate short-term care, with supportive therapies to return residents to the lightest level of care possible. Other residents who have initially come to the facility's nursing care center from the general community have been discharged to assisted living or to an independent living facility. On the other hand, as some residents become more functionally or cognitively impaired, they move to assisted living or to the nursing care center.

Board-and-care facilities, sometimes known as rest homes, provide little more than housing and meals. These facilities can house as few as four or five residents boarding in someone's house, to several hundred residents. In 1989, the U.S. General Accounting Office (GAO) estimated that there were 41,000 licensed homes of this type with 563,000 beds and additional unlicensed beds. The GAO also found that many failed to provide medical care, hygiene, and nutrition.

New York was among the first states to expose such abuse and fraud. It created a permanent special prosecutor to investigate such matters. In 1974, information was uncovered that millions of Medicaid dollars earmarked for the care of elderly indigent patients was instead going into the pockets of certain New York nursing home owners and operators. By 1977, with the federal government spending $16 billion a year on Medicaid, a Senate investigating committee found a substantial portion of the total was the result of "rampant fraud and abuse," brought about by state indifference. In 1977, Congress passed legislation establishing the State Medicaid Fraud Control Unit Program, which enabled qualifying states to become eligible for reimbursement of 90 percent of their expenses for fraud control expenditures.

Background and Development

By the turn of the twenty-first century, the assisted living revenue was expected to grow from $8 billion to $25 billion—an annual rate of 25 percent.

Continuing-care retirement communities' (CCRCs) assisted living beds rose 12.8 percent to a total of 13,584. In 1994, 526 CCRCs had 68,895 independent living units, 12,369 assisted-living beds and 20,360 nursing beds.

Current Conditions

Despite increasing demands for residential care, fewer people are winding up in nursing homes than had been predicted. Healthier lifestyles and improved medical technology are allowing seniors to recover from strokes, broken hips, and other pitfalls of the aging process so that they do not need to live in a skilled nursing facility.

For that reason, the days of the skilled nursing home as the preferred model of long-term care may be numbered, as nursing home industry leaders warned their colleagues. They recommended that nursing homes either be converted to apartment-like facilities providing assisted living or to sub-acute institutions caring for the seriously ill, as part of a managed care network. Since the proposed health reforms in the mid 1990s were calling for moving health care delivery away from hospitals and into community-based satellite health care facilities, nursing home leaders suggest that homes serve the needs of non-resident seniors in their community as well as residents. Assisted living units built in conjunction with single-family homes and condominiums in a planned unit development or adjacent to a health center, are a newer concept that would allow older persons the opportunity to mingle with their children, relatives, or other young people in a neighborhood.

In the meantime, nursing homes continued to search for revenue and ways to reduce costs, hoping to become integrated into health care networks of hospitals and clinics. Medicaid was the fastest growing state expenditure. At a time when the states were in financial distress, many tried to hold down expenses by not issuing permits for the construction of new nursing homes. In 1997, changes in the nation's health care system cut back on Medicaid reimbursement for elder care providers. By the late 1990s, some of the leading providers of care had filed for bankruptcy protection.

Prejudices about the elderly among health care professionals and other staff, plus attitudes that favor high-tech over low-tech treatment, may also interfere with advances in residential care. Worse than prejudices are the repeated instances of neglect among residential facilities caring for the elderly, leading to complaints that the residents are merely being "warehoused." Reports of such instances have continued to prompt investigations. Nursing home inspections have become more stringent, leading to the discovery of more abuses. In 1996, there were investigations of nursing homes nationwide. Nursing home abuse has led states such as New York to propose criminal checks on nursing aides and stringent penalties for convicted abusers. Nursing homes continued to be plagued by accusations of mistreatment into the new century.

The "hottest niche for the future," according to Sandy Lutz in Modern Healthcare, appears to be assisted living and low-intensity medical services housing. Residential care was number one on the U.S. Small Business Administration's list of fast growing markets, with most of the growth coming from assisted-living facilities.

Industry Leaders

Leaders were not without challenges in the late 1990s and into the twenty-first century, facing bankruptcies and a continuing stigma toward the nursing home industry. Many organizations sought to change the public's concept of nursing homes from dull, sterile places to elegant manors with delicious food, fun activities, and home or resort-like atmospheres.

At the end of the 1990s, leading public companies were: Sun Healthcare Group Inc., Beverly Enterprises Inc., Assisted Living Concepts Inc., Manor Care Inc., Marriott Senior Living Services, and Mariner Post-Acute Network Inc.

Changes are rapidly occurring in the insurance industry to provide for long-term care coverage. TIAA, a major retirement fund for college teachers, began to offer such insurance for family, including parents, in 1997. Other retirement systems and private insurers will most likely follow. There also is a movement to obtain federal assistance for assisted living as a lesser-cost alternative to nursing homes.

Workforce

Personnel at residential care facilities will vary according to the number of residents and services provided. Staff may be employed by the facility or in cooperation with an outside agency. In nursing and convalescent homes, there is a manager or administrator, plus personal care attendants on staff who assist residents with personal needs (such as feeding, dressing, and bathing), nurses who assist residents with education and the administration and supervision of medication, physical therapists, activities coordinators, food service managers, and maintenance staff.

Many states require the administrator or manager of nursing homes to complete a state-approved certification program within one year of being hired and require them to take continuing education courses annually from a state board of nursing, social work, or other such agency.

Employment in residential care facilities in general represents 18 percent of the jobs in the health services. Jobs in this sector increased by 3.9 percent during the 1980s, adding a 550,000 employee increase to the industry. Early in the twenty-first century, nursing homes and personal care facilities employed about 1.6 million workers at approximately 21,000 work sites. By 2005, this figure is expected to rise to 2.4 million workers. Employment in this industry has been affected little by the changes in the economy.

One new and possible trend is the movement toward a holistic or universal work attending to all the daily needs of a resident. The same person will assist with meal services, light housekeeping, and laundry. Retraining staff from task orientation to resident orientation is a major challenge. Employment strictly in this industry was 229,000 in 1995, an increase of 7,000 from 1994. If the average workweek and wage is the same as that for the broader category of nursing and personal care, it is 32 hours and $9.06 per hour, respectively.

Further Reading

American College of Health Care Administrators (ACHCA). Available from http://www.achca.org/ .

Assisted Living Federation of America (ALFA). Available from http://www.alfa.org/ .

Bruck, Laura. "Assisted Living Snapshot." Nursing Homes, April 1996.

Calbria, Mark A. "Elderly Migration, a Study of Major Cities." Housing Economics, November 1996.

Goldman, Jonathan. "Long-Term Care and Assisted Living." Institutional Investor, Bonus supplement. December 1996.

Guyton, Kate. "Just Like Home." Washingtonian, October 1996.

"Long-Term Care Alternatives. A Special 1997 Update." New York: Teachers Insurance and Annuity Association, 1997.

Lutz, Sandy. "Wall Street's Ills Infect Healthcare IPOs." Modern Healthcare, 29 July 1996.

McCune, Jenny. "The Face of Tomorrow." Journal of Business Strategy, May/June 1995.

McLean, Bethany. "Promising Industries for 1997." Fortune, 23 December 1996.

N.Y. State Special Prosecutor for Medicaid Fraud Control Unit. "New York State Special Prosecutor for Medicaid Fraud Control Unit."

"National Data on Nursing Facilities." American Health Care Association. Available from http://www.ahca.org/who/profile4.htm1 .

"Nursing Homes: Bad Medicine for Elderly." USA Today: The Magazine of the American Scene, July 1996.

Nursing Homes. Occupational Safety & Health Administration/U.S. Department of Labor. Available from http://www.osha-slc.gov/SLTC/nursinghome/ .

"Oregon Keeps Assisted-Living Costs Down." Public Health Reports, May 1996.

Pallarito, Karen. "Assisted Living Leads Growth." Modern Healthcare, 20 May 1996.

——. "Hospitals Turn Attention to Assisted Living." Modern Healthcare, December 1995.

Patterson, David. "When Is a Chair not a Chair?" Nursing Homes, May 1996.

——. "REITs and Assisted Living." Nursing Homes, April 1996.

Peck, Richard L. "Private LTC Insurance: Still a Budding Resource." Nursing Homes, April 1996.

"'Practical' Research: Assistive Technologies." Nursing Homes, November 1996.

Rotenier, Nancy. "Old Folks Welcome." Forbes, 17 July 1995.

Roth, Dennis. "Golden Opportunities in Assisted Living." Commercial Investment Real Estate Journal, Spring 1995.

Rowe, Megan. "Assisted Living: Hospitality's Horizon Expands." Lodging Hospitality, November 1996.

Schless, David S. "Challenging 10 Commonly Held Assumptions About Seniors Housing." National Real Estate Investor, November 1996.

Schwartz, Ronald. "LTC Organizations Split on Assisted Living Guidelines." Nursing Homes, July 1996.

"Today's Nursing Facilities and the People They Serve." American Health Care Association. Available from http://www.ahca.org/who/profile.htm .

U.S. Department of Commerce. Economics and Statistics Administration. Bureau of the Census. Statistical Abstract of the United States 1996. 116 ed. Washington: GPO, 1996.

U.S. Department of Labor. Bureau of Labor Statistics. E&E: Employment and Earnings, December 1996.

——. Monthly Labor Review, November 1996.

Weaver, Peter. "Opportunity Knocks as America Ages." Nation's Business, August 1996.

Widdes, Tal. "Assisted Living's Universal Worker." Nursing Homes, April 1996.

Wise, Kathryn O. "Making the Choice to Carpet." Nursing Homes, July 1996.



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