Researchers Question Home- and Community-Based Services as Nursing Home Costs Rise

Nursing home costs are skyrocketing faster than general inflation and even the price tag on other forms of medical care, casting doubts on affordability for older adults, many of whom may be further encouraged to turn to cheaper home-based care as an alternative. But while home care may be kinder to seniors’ pocketbooks, it may also face its own set of challenges.

Findings on nursing home costs come from a recent study published in the journal Medical Care Research and Review.

Conducted by researchers from Georgetown University Medical Center, University of Michigan and Monash University in Australia, the study examined price data from state-administered nursing home cost reports in eight states between 2005 and 2010. In general, annual out-of-pocket expenditures for nursing homes can easily exceed $70,000, the study found.


In particular, the study’s team of researchers noted that nonprofit nursing home chains typically charged the highest private-pay prices, while for-profit chains had the lowest. Additionally, nursing homes that operated in less crowded markets routinely charged more than their peers that faced stiffer competition, according to lead author Sean Huang, an assistant professor at Georgetown University.

“We do find the price is higher when [nursing homes] have less competition, and the price is also higher when nursing home beds are mostly occupied,” Huang told Home Health Care News.

Texas reported the least expensive nursing home out-of-pocket costs at roughly $47,800 annually, according to the study, while New York had the highest costs at $121,910 annually.


The price difference between for-profit chains and nonprofit nursing home chains is about $4,160 a year, researchers noted. Meanwhile, there wasn’t a significant difference in prices between for-profit and nonprofit independently operated nursing homes.

“I think it’s true that you will see more cost savings if we could avoid nursing home stays and use more home care and home health,” Huang said.

Over the years, health care policymakers have indeed attempted to reduce spending by shifting care into the home.

Separate findings, however, are raising questions about the success of home- and community-based services in terms of keeping patients healthy and out of the hospital.

Specifically, a new study published at the beginning of July in the journal Health Affairs argues that too little is known about the outcomes of home- and community-based services, especially for racial and ethnic minority groups.

Using national Medicaid claims data tied to older adults enrolled in both Medicare and Medicaid — dual eligibles — researchers found that home- and community-based services actually had worse outcomes than nursing facility care among dementia populations.

In other words: As home-based care options are expanded, policymakers should still prioritize the need for access to high-quality nursing facilities, researchers argued.

“While Medicaid’s trend to shift long-term care from institutions to the community is intuitively appealing, it is not clear that the health outcomes are better in home settings than in nursing facilities,” said the study’s leader author, Rebecca Gorges, a PhD candidate in the University of Chicago’s Harris School of Public Policy. “Our findings suggest that home and community-based services need to be carefully targeted to avoid adverse outcomes, and that the racial and ethnic disparities in access to high-quality, institutional, long-term care are also present in home and community settings.”

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