Challenges of publicly-operated nursing homes in New York State: Threats to the long term care safety net

In New York State, most counties operate nursing homes. These facilities have historically served as a critical component of the local public health safety net. About 10% of all nursing homes and 14% of all nursing home beds outside of New York City are run by counties. This study examined the challenges that threaten the fiscal and operational viability of these facilities. The study consisted of a survey of county nursing home administrators and an analysis of Medicare Cost Reports for 1997, 2002, and 2007.

Compared to nursing homes operated by private and voluntary entities, county-run nursing homes in upstate New York serve a higher proportion of residents whose primary payer is Medicaid. Reimbursement rates for these residents are inadequate to cover the costs of care. Case mix indexes are lower in county-nursing homes, as these homes tend to attract lower-acuity residents and cannot compete with other facilities for short-term, high-acuity admissions with higher daily reimbursement rates. Operational costs are higher due primarily to higher benefit levels paid to county employees than to their counterparts in the private sector, as well as a higher number of nursing hours per bed than in other types of nursing homes. Most county homes operate with a budget deficit and rely on taxpayer subsidies in order to survive. These subsidies and other funding streams are threatened by fiscal pressures on counties and by policy changes at the state and federal levels.