Cost of Nursing Home Care Consistently Outpaces Inflation, Study Finds

The out-of-pocket cost of receiving care in a nursing home has consistently grown faster than gains in consumer and medical care prices, raising questions about the affordability for seniors without Medicaid coverage or long-term care insurance, according to a study published in the journal Medical Care Research and Review.

The study — which drew from data spanning 2005 to 2010 across eight states — also found that for-profit and not-for-profit nursing home chains had significantly different private-pay prices for their care. After adjusting for differences in geography and facility, non-profit chains were found to charge the highest private-pay prices, while for-profit chains had the lowest ones.

“From the consumer perspective, the price is increasing much faster than inflation,” Sean Huang, an assistant professor at Georgetown University and the study’s corresponding author, told Skilled Nursing News.


Huang and the team used somewhat older data in order to include as many states into the analysis as possible, he explained. Though some states, such as California, had newer data, cutting the data off at 2010 allowed for the most states to be included.

The researchers drew from price data compiled in state-administered nursing home cost reports; information on nursing home characteristics from the Long-Term Care Focus database at Brown University and hand-coded identifications of chain membership; and local information from Area Health Resource files and the Quarterly Census of Employment and Wages from the Bureau of Labor Statistics.

Overall, independent not-for-profit nursing homes had higher average prices — at $228.60 per day — than for-profit nursing homes, which came in at $171.81 per day. Independent nursing homes also had higher prices on average, compared with chain-owned ones, the study found.


“In terms of payer mix, [for-profit] NHs have higher percentages of revenues from Medicaid-pay residents and Medicare-pay patients, while [not-for-profit] NHs are more dependent on private-pay residents,” the study noted. “NFP chains on average receive 30.4% of their revenues from private-pay residents. Only 19.4% of revenues in independent FPs come from private-pay residents.”

Chains — both not-for-profit and for-profit — tended to be in areas with a lower median household income, while independent for-profits and not-for-profits were disproportionately more likely to be in New York (34%) and California (30%); nursing homes in the Empire State were significantly less likely to be members of chains, the study noted.

“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 noted to SNN. “If you have few competitors in the market, then they potentially have the ability to raise the price, or there’s no incentive to cut price to compete … [and] when 90-plus beds are filled, you don’t mind losing one or two customers.”

And though the data in the study is cut off at 2010, Huang doesn’t think there’s any reason to suspect major changes in the trend since — though he emphasized that there’s no way to know for sure.

And while the growth in price could partially reflect more comprehensive care services offered in nursing homes, the financial burden for private-pay residents is still on the rise, with potential implications for Medicare and Medicaid beneficiaries as well.

“Overall, our results suggest that when evaluating the value of NH care (quality relative to price), the private price is an important factor to consider,” the researchers concluded.

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