Diversification: a view from the grass roots.

If there remains any doubt that nursing homes are confronted by diversification challenges such as they've never seen before, come to Washington State. Here, we in the nursing home field are busy "recycling our excess capacity." That "excess" can be traced to our Initiative 601, passed in 1993 and limiting state spending. Responding to this, our Department of Social and Health Services has moved very quickly in the direction of creating new long-term care settings, discharging patients from nursing homes, if at all possible, and diverting them away from nursing homes to other settings.

To show the priority our State has put on this, in our last legislative session, the Aging and Adult Services Administration, which has direct jurisdiction over nursing homes, was the only department with a budget proviso requiring it to report back to the legislature on how it planned to meet budget goals. The cost of nursing home reimbursement was growing faster than the Initiative allowed. Rightly or wrongly, diversification became the watchword.

At this point, few are looking at getting out of nursing home services entirely. The trend, rather, is to evaluate community needs and the overall market, and to define the facility's mission and its capacity for meeting it. In the process, waiting lists are evaporating and some facilities are experiencing high vacancy rates.

The State has provided positive incentives to diversify, as well. Two years ago, we passed legislation that allows nursing homes to "bank" beds - i.e., not pay licensing fees - for up to four years while they develop other long-term care services. (Of course, overhead costs remain.) Sometimes, though, facilities don't always like what they see.

For example, because of the way the State has defined assisted living, much of the existing "bricks and mortar" can't meet the physical plant requirements without substantial - and usually cost-prohibitive - renovation. Instead, they're looking at other kinds of "housing with services," or outpatient therapies, or other types of long-term care services.

We'll have subacute - but how many subacute beds do we need? In only two years, we've gone from everyone considering entry into the subacute market to a very few discussing it: the market isn't that big, hospitals are getting involved, and many traditional homes just can't gear up to the technological and staffing needs involved. There will still be a need for the traditional nursing home, and while we'll be adding new services, it is likely they will be provided in conjunction with our traditional services.

We all know, however, that this is not an excuse for doing nothing. There used to be those who said, "We've seen it all before - it'll come and go - but we'll still be here." They're not saying that anymore - they're making substantial changes, working intensively with their boards and getting them to move much quicker than they normally would.

In a sense, this is a very liberating experience, a great time to be creative. For years nursing home owners and operators were an oppressed group of providers. If they were to build the kind of health care facilities they really wanted to, they would look nothing like what they were forced to build, due to regulations. From design, to implementation, to provision of services, they've been marching to everyone else's drummer. Suddenly you remove all of that and say, "OK, what is it that you want to be?"

Meanwhile, of course, we face the question: what about the traditional users of nursing homes? How will these changes impact them? Let's face it, it is nobody's lifelong goal to be a resident of a nursing home. What the elderly do want - autonomy, privacy, a retained sense of individuality - may, or may not be, available in their own homes. Time will tell whether these changes will meet their needs. For now, this change may be a healthy situation, because our industry is much more consumer-driven. Where we have a mission to serve a specific population, we have a lot more flexibility in implementing this - and people in our industry are getting very creative.

I have joked that there would be less anxiety if we had a crystal ball with a 10-year warranty. In Washington State, we have a fairly progressive Aging and Adult Services Administration. But even as they're "shifting their paradigm," and we're pushing them to shift it even further, they lapse back into: How would we reimburse for this? My own response is, "I don't know, but don't get in the way. Let's go with the thought, see if it's a good idea and then see if we can coordinate the resources to do it."

This is no easy task. We have lots of very old, frail, very poor people in the housing programs, and they're qualified to go nowhere. They can't be admitted to nursing homes and there are not enough alternative care settings to serve low-income elderly, so the housing programs struggle to coordinate appropriate care for their residents.

We need the flexibility for the State to perhaps collaborate with a nursing home that can run nursing services into those units, whether we call it home health care or something else. But then, we're likely to have a regulatory agency saying, "No, you have to license that as a board and care, etc., etc." This mentality gets in the way of progress and the development of other care settings.

Providers are guilty of reflex thinking, too - a housing provider thinks about brokering a lot of in-home services and immediately thinks about what kind of license he needs.

Fortunately, we have some gutsy people willing to take on the system and work with the State and take the necessary risks. They are willing to accept the challenges of new ways of documentation, more personalized care, creating swing bed systems between nursing homes and assisted living, and so forth.

What's going to come out of all this? I think we may be getting away from looking at facility-based long-term care as a particular kind of box. Maybe the concept will be more like "shelter with services." I had recent occasion to meet with representatives of housing, assisted living and nursing homes across the nation. I asked if we were talking about assistance with ADLs or if we were talking about a box. About 25 of the 30 people said they weren't talking about a box, and a nursing home administrator said, "We have to stop trying to define the box and define the care we're providing instead."

Quite frankly, I was astounded. People who have been around for 25 years were saying, "What we have learned is that we just keep creating new boxes, and then it gets over-priced and overregulated, and nobody wants to be there anyway. So why can't we meet the consumers where they are?"

So my crystal ball says that, by the turn of the century, we may be looking at long-term care as shelter with services. And the most consumer-oriented will survive.

Karen Tynes is Executive Director of the Washington Association of Homes for the Aging.