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Does California Need More Nursing Home Beds?

Absolutely not! - According to most long term care advocates in California. What California really needs is more affordable access to alternatives to nursing homes, such as home care services, residential care, the assisted living waiver program, adult day care and adult day health care, more mental health services and special treatment programs, and accompanying Medicaid waiver services like those in effect in Washington state and Oregon, where residential care and assisted living services are available under their Medicaid programs. Alternative housing programs and moving residents out of nursing homes was the subject of a recent New York Times cover story.

Unfortunately, the nursing home industry is peddling the myth that California will need at least 10,000 more beds by the year 2020 to “keep up with demand” as occupancy rates and the demand for beds in nursing homes keep increasing. In fact, no one is demanding more nursing home beds and study after study has shown that:
  • nursing home occupancy rates are declining or remaining flat due to consumer demand for alternatives;
  • consumers are not “demanding” nursing home beds, but demanding home and community based alternatives such as in-home care and assisted living;
  • and
    in 26 years, the demand for nursing home beds has not risen significantly and is unlikely to rise significantly in the future, as elders seek alternatives to long term nursing home stays.

There are approximately 1,250 licensed nursing homes in California with about 120,000 beds, and over 300,000 Californians are cared for annually in licensed long-term care facilities. However, 83% of nursing home residents are discharged after a stay of three months or less, and only 6% of all residents remain in the facility for one year or more. Nursing facility occupancy rates in California are approximately 87%, which means that 13% of nursing home beds or 15,600+ beds are available on any given day.

Corporate Grab

Despite these facts, the for-profit nursing home industry is sponsoring AB 2104 which would expand the California Health Facilities Financing Authority and the California Health Facility Construction Loan Insurance Fund to include for-profit corporations that operate skilled nursing facilities in California, allowing them to acquire or build new facilities or expand current facilities. Remarkably, they even sold their misinformation to the legislature. AB 2104, authored by Assemblyman Matthew Dababneh (D-Encino), passed the Assembly Health Committee by a vote of 18-0!

These for-profit corporate entities want access to two programs set aside specifically to help eligible and credit worthy nonprofit and public health facilities reduce their cost of capital, and promote important California health access, health care improvement and cost containment objectives by providing cost-effective tax-exempt bond, low-cost loan, and direct grant programs. In other words, they want the taxpayers of California to fund the expansion of their companies.

Note that 88 percent of California’s nursing homes are for-profit and 12 percent are non-profit. The for-profit corporations and real estate investment trusts that own and operate skilled nursing facilities in California are some of the most profitable entities in the country, bringing in hundreds of millions of Medicare, private pay and Medi-Cal dollars every year. Without even taking into account the inflated corporate salaries and the numerous ways in which profits are “hidden” in administrative, lease back and management costs, their profit margins are more than ten times that of the non-profit margin.

Allowing these programs intended for public and not-for-profit health care entities to be raided by for-profit nursing home corporations is not only a travesty, but also a betrayal of the taxpayers of California and of the mission of both programs.

AB 2104 is currently held under submission in the Assembly Appropriations Committee, which means that the author and the committee members might want to work on or discuss the bill further. This does not preclude the bill from being set for another hearing.
AB 2104 should die a quick death and the Legislature should focus on providing the citizens of California with real long term care remedies and alternatives– not more substandard, unaffordable and unwanted corporate nursing home care.