We cannot get there from here.

Families who have relatives in nursing homes face a strange set of contradictions: most (85 percent) are satisfied with care but the primary payor (Medicaid for 70 percent of residents) and regulators are not satisfied. Many providers are unable to meet regulators' expectations and some are considering withdrawing from the Medicaid program.

This article describes the current status of Michigan nursing home care and reviews three options available for the future of these services.

First, it is important to consider the current condition of nursing home services:

* There are 50,576 nursing home residents. [1] This has remained relatively stable for 20 years in spite of the tremendous growth in the elderly population.

* The Medicaid program purchases 12 million days of nursing home care at an average of $95.62 a day, of which $75 is paid by the state and federal government and $20.62 is paid by the resident (Social Security, pension). [2]

* 85 percent satisfaction level of families with relatives in nursing homes. [3]

* 97 percent compliance with 311 federal regulations reviewed during annual three-day inspections or complaint investigations. [4]

* 65-100 percent annual turnover of nurse aides (varies depending upon the part of the state), 35 percent turnover of nurses; and 41 percent turnover of administrators. [5]

* unrelenting regulators who constantly increase their unrealistic levels of perfection, often against the wishes of families or attending physician.

* chronic underfunding and reducing of Medicare and Medicaid funding.

* declining occupancy levels (95 percent to 89 percent from 1990 to 1998). [6]

* predominantly negative media anxious to report exposes of bad care with little discussion of true solutions.

* a largely uninformed public who blindly accepts the negative press but is sympathetic to increasing public funding of nursing home care but not accepting personal responsibility for financially planning for their own LTC needs.

* there is little sense of a shared commitment from all stakeholders (government regulators, Medicaid and Medicare, professional advocates, providers, media, actual consumers of care). There is a strong government and press bias against providers as if they were the only barriers to meeting their collective expectations.

The predominant strategy of Michigan's government and legislature is to limit the amount of nursing home services, aggressively cite deficiencies, and never provide adequate funding to meet regulatory expectations. Since the early 1980s, Michigan has been developing an "alternative" to nursing homes called the Home and Community Based Care services. After 15 years there are about 12,000 individuals annually served by this limited option. While there are 50,576 residents in Michigan nursing homes, this option, called MI Choice, will never substantially meet the need for nursing home services because it is only applicable to residents with a strong support system at home.

Now for the future. There are three options: (A) provide adequate public/private funding to meet regulators' expectations; (B) providers could meet expectations without adequate funding and; (C) providers should no longer offer nursing home services because it is impossible to meet regulators' expectations. Option (C) is the most likely and inevitable outcome. Unfortunately, there is no plan to deal with this scenario, which will ultimately become an access and Medicaid budget problem because of increasing costs to hospitals unable to find appropriate alternatives. There will also be a huge problem for the families with no available serious alternatives to many in need of nursing home care.

Here are the 3 options

Option A. Medicaid funding for increased wages/benefits could create a stable committed staff. This would amount to an increase of $327 million for an employee benefit of $3 more in wages per hour and $3 more in benefits (primarily family health coverage). There are about 50,000 employees working in nursing homes. The typical reaction of most legislators is that such an increase is outrageous and highly unlikely for any program, let alone for nursing homes. However, for education or prisons there seems to be no problem for them to make that commitment.

Would Option A work? Yes. In Michigan, there is a natural experiment in higher public resource commitment for nursing home care. There are 37 County Medical Care Facilities. They receive Medicaid rates that are $30 more per day. Their turnover rate is dramatically lower. Their family satisfaction scores are higher and their annual inspections are better with fewer deficiencies cited. These data are very convincing. Money does make a difference, especially to the caregivers. This investment would work if there is the political will to make this investment at this time.

Unfortunately, Option A is unlikely to happen. A significant portion of the Michigan citizens is willing to make a commitment to improving care. According to a recent MSU study, about 50 percent are willing to increase taxes to lower turnover and increase quality in Michigan nursing homes. However, there is no political will on either the Republican or Democratic leadership to champion this commitment. Even when there is a significantly new infusion of tax revenue from the Tobacco settlement, the Republicans have committed this money to education. The Democrats want to create task forces and likely introduce even more regulation and punitive enforcement actions.

Option B. Providers could simply meet unrealistic expectations without adequate resources. This seems to be increasingly unlikely because the expectation level keeps being raised without sufficient increase in appropriate resources (wages/benefits for staff).

Michigan regulators have historically indicated their dissatisfaction with our providers by placing Michigan at the highest levels of deficiencies--twice the national average. (Michigan: 9.7 cites; United States: 5.5 cites.) [7] This has been the case for probably 15 years. Now HCFA with its new initiatives and with the support of the MDCIS will increase the fines and punitive enforcement efforts. Many federal agencies (GAO, OIG, HCFA) and Michigan's Attorney General's office will step up their investigation into unmet expectations (bad care). This in turn will lead to negative press coverage and finally even more regulations without funding.

Realistic expectations are for a safe, secure, clean facility with staff committed to recognizing and caring for the social and medical needs of the residents. Unrealistic expectations include: (1) prevention of all pressure sores, regardless of any circumstances short of active dying; (2) resident participation in social activities regardless of personal choice or historical resident preferences; (3) mandatory access to return from a hospital stay whether or not the home is capable of providing appropriate care; (4) zero tolerance for physical abuse from other patients without allowing the home to discharge residents who place others at risk; (5) penalizing homes for following the directions of the resident, family, and physician regarding the use of physical or chemical restraints; (6) not allowing residents to have preferred food choices because of surveyor dietary opinions not held by the resident, physician, or staff nurse; (7) penalizing the home for making it more home-like, but placing some residents at hypothetical risk; (8) preventing the home from providing care to residents because surveyor believes there may be "potential harm." Anything can be considered potentially harmful (for instance, a resident could be burned by a coffeepot; therefore no coffeepot). (9) residents should receive highest practical level of psycho, social, mental, and physical well being (whatever that is).

In short, unrealistic expectations are defined in the eyes of the annual inspectors. Each has his own definition. Even the best homes never know what criteria will be used at the next annual survey.

Providers cannot meet unrealistic expectations without adequate resources.

It is irresponsible for government and legislators to identify problems in nursing home care and then walk away from adequately funding the effective solutions to those same problems. They claim there is no money. However, here are plenty of new resources for their own priorities of prisons and education.

Option C. Providers who cannot meet the unrealistic expectations of regulators given inadequate resources should simply accept that "they cannot get there (meet unrealistic expectations) from here (with limited resources)." The most responsible decision is to phase out of the Medicaid programs and convert their LTC expertise into preferred products with payors who are willing and able to pay the price for meeting their expectations. Homes in Florida are considering such an option, and many current nursing home owners/operators are already diversified into other services.

Kelly Schild, administrator, Floridian Nursing and Rehabilitation Center in Miami, testified at the Health and Environment Subcommittee of the House Commerce Committee. Schild warned that many providers would opt out of Medicaid unless problems with the program are addressed. "We cannot economize by spending less on food. We cannot cut back on staff. We cannot diminish the resident's quality of care. To survive, we have no choice but to opt out of the Medicaid program."

Option C is the most likely and inevitable scenario--that nursing home services will be and should be dramatically reduced in the future. This is the clear signal from Michigan's government, regulators, funders, professional advocates, and the press. Providers need to accept this scenario and convert their LTC expertise into the provision of new product lines like assisted living, adult foster care, respite care, adult day care, and home health. This definition of the future needs to be embraced rather than denied. Read the "tea leaves."

Craig Laman, president of the Tennessee Health Care Association and owner of Bells Nursing Home Inc. in Bells, Tenn., said it best:

"It is vital that nursing homes offer a complete continuum of care. I think we're going to have to offer every kind of care possible including residential and some may go so far on the other end as acute care. We've got to get to the point where we can ask the customer what kind of care they need and want and then tell them, 'We have it.'" [8]

Back to the future

Nursing homes are at the same place hospitals were in 1985 with the introduction of the DRGs (diagnostic related groups). It was a clear public policy turning point that indicated that the de-institutionalization trend would dramatically decrease the number of acute care hospital days and reduce the total number of hospitals. Both predictions came true. This same trend has been impacting the nursing homes as evidenced by the declining occupancy in an expanding market.

State Medicaid programs and HCFA regulators created the nursing home product and have made it impossible for most providers to endure. Government has a role to play in this transition period, if it chooses to do so. Some states like Nebraska are working with providers to convert their nursing homes to the preferred assisted living product by committing some of their Tobacco settlement funds to this initiative. This is an example of how government can be helpful.

In the end, we all need to learn the lessons from excessive regulation and constant underfunding of public programs. Current budget considerations of the potential threat of increasing taxpayer obligations are limiting our commitment to prepare for and care for the growing frail elderly population. Americans did not walk away from the baby boomers as children and adults. Government and taxpayers accepted the challenge and built the necessary educational infrastructure to meet the needs of that population. Now they are aging. We need to be just as courageous and generous to construct the appropriate solutions to these citizens who arrive at the final stages of their productive years.

There is much rhetoric about the problems in nursing homes. There is little serious discussion about appropriate and effective solutions.

Strategy needed

The Governor needs to set out a strategy to meet the needs of the chronically frail elderly and ask the citizens of Michigan to support his strategy with additional resources if necessary or a re-prioritizing of current public funding. The Governor has a strategy for keeping us safe by building prisons. He has a strategy for improving our productivity by enhancing educational opportunities. However, he should consider creating the same type of excitement and planning in the area of the frail elderly.

The best strategic discussion of the future of LTC is the Representative John Jamian Report in 1996 called, "The Demographic Imperative: Reform of Michigan's LTC System." The recommendations should be equally acceptable to members of either political party. This is a starting point to discuss the future.

HCAM prefers Option A and will do everything in its power to obtain private/public resources to meet the expectations of our customers, payors, regulators and members. For homes that envision Option C as their likely future we will provide guidance to successfully transition themselves into new market niches.

Reginald Carter is executive vice president, Health Care Association of Michigan.

References:

(1.) American Health Care Association, 1998.

(2.) Michigan Senate Fiscal Agency report, Medicaid Funding for Nursing Home Services: A Historical Perspective; June 2000.

(3.) Great Lakes marketing, Family Satisfaction Survey: Association Report December 1998.

(4.) Health Care Association of Michigan, Consumer Guide to Michigan Nursing Homes, 1999.

(5.) Health Care Association of Michigan, 1998 Wage and Personnel Survey; May 1999.

(6.) Department of Consumer and Industry Services Quarterly Staffing Bed Utilization Report.

(7.) American Health Care Association, HCFA OSCAR reports, 1999.

(8.) Tennessee Health Care Association Press; Jan. 8,1999.

                    Investing in staff increasesquality
                               1998         1996 Staff
                               Average      turnover
                               Medicaid     percentage
                               rate per day Aides      RNs LPNs
County Medical Care facilities $123.06      35%        25% 34%
Nursing homes                   $95.62      75         43  36
                               Daily average Average Average
                               staffing              satisfaction
                               levels 1998           level
                               3rd quarter           1988
County Medical Care facilities $3.44 an hour         92%
Nursing homes                  $3.03 an hour         85
                               Average
                               OBRA survey
                               deficiencies
                               1988
County Medical Care facilities 6.7
Nursing homes                  9.3