Problems Plaguing PA's Nursing Home Industry and the Proposals to Correct Them

Dennis Short, Research Director for SEIU Healthcare PA, joined PHAN's Tuesday Night Policy Call Series to talk about the problems plaguing the nursing home industry and the exciting proposals moving through Harrisburg to address them. 

The state of the nursing home industry in Pennsylvania:

In 2011 the nursing home industry in Pennsylvania generated $511 million in profits, largely through taxpayer dollars from Medicaid or Medicare reimbursements. In Pennsylvania, like most other states in the country, Medicaid is the biggest payer of the system. 

Also in 2011, the Center for Medicare & Medicaid Services (CMS), made a move to correct some over-payments that were happening in 2010 and 2011, and so they cut the industry rates by 11%.

(Later in the call, there was a question about what lead to the 11% CMS cuts. Dennis let us know that in 2010 CMS tried to deal with practices within nursing homes for Medicare residents. A lot had to do with was was perceived as overuse of certain therapies. CMS changed how they reimbursed some of the therapies, but also increased reimbursement rates for residents that needed very complicated therapies. Wouldn't you know that just after that increase was passed, the number of residents that needed very complicated therapies increased dramatically? Essentially, the industry learned how to make lots more money off the new system. To correct that, CMS cut rates by 11%)

Governor Corbett's current budget proposes a 2% increase in Medicaid rates for nursing home providers and this comes after a number of years of flat funding for the industry. 

Also important to note: Pennsylvania is considered to be a good state to do business in if you're a for-profit nursing home. Nursing homes here benefit from high Medicaid reimbursement rates comparable to other states with similar costs of living. Consequently, companies are coming into the state and buying up a lot of independent Pennsylvania providers.

This is even true in 2012, where you still see an increase in profitability despite the 11% cuts in reimbursement rates.  How is that possible?

Most of these chains are owned by private equity firms and private investors that put management under tremendous pressure to maintain whatever gains they were able to make in 2011 and 2010. When rates are not increasing, the only way to maintain those profits is by cutting costs: cuts to staffing as well as cuts to supplies.

Cuts to staffing

Dennis said "there is real, real pressure to staff buildings as little as they can get away with, without violating the state minimums." Nursing homes now use staffing models that come out of other industries, similar to the one utilized by large food service chains. This translates to a disruptive life for workers who get up early in the morning, send kids to daycare, and arrive at work to be told they aren't needed. It also means far less quality of care for our loved ones in these nursing homes.

Cuts to supplies

When supplies run out at the end of the month, that's it. Nursing home workers then need to figure out how to make do with little or no supplies. Sometimes this means hiding supplies in residence rooms, sometimes it means stealing them from one resident to help another who has been waiting a day longer.

Legislative initiatives to correct these problems:

1) Staffing proposal

In Pennsylvania, the requirement is that nursing homes staff up so that every resident receives 2.7 hours of nursing care per day. (That's 21.3 hours a day they are not required to have any care.)

The proposal: that there be a minimum of staffing for certified nursing aid versus registered nurse within that 2.7 hours.

2) Accountability proposal

Nursing homes are required to report overall staffing levels to the state and the Department of Health then posts that. The biggest indicators of quality care within nursing homes is the level of turnover because when the continuity of care that caregivers deliver to residents is lost it is disruptive to those seniors.

This proposal would make turnover and staffing levels public so that folks could make an informed decision about whether or not they should send their loved one to a particular nursing home.

3) Spending floor proposal. 

Nursing homes receive a per diem for care, but it was recently found that 30% of the industry wasn't spending the full amount they received from Medicaid, Medicare and other sources like private pay, on actual care. Remember that the Medicaid per diems especially come from our tax dollars. That's the money we give to nursing homes specifically to issue a certain level of care to our seniors and, unfortunately, that hasn't been spent appropriately. 

The proposal: Spend 95% of per diem rates on resident care. Nursing homes that fail to do this would have to return the amount of money they don't spend. The easiest way for them to meet the threshold would be to increase staffing, supplies, or both.

What's happening around these proposals:

There are sponsors for most of these in the House and Senate right now. 

Next week, on the 12th, SEIU Healthcare PA will release a White Paper that goes into much more detail in all these pieces. So, for instance, one of the things they looked at was when you compare the spending amounts to the quality outcomes, facilities that spend more money on resident care have much better outcomes. 

This will be followed by a lobby day on March 18th. 


PHAN will be supporting this effort and we hope you will, too! Join us in Harrisburg to tell lawmakers No More Excuses. Our seniors deserve high quality care in nursing homes. 

Want to get involved? Have a story you want to share? Contact Athena at or Erin at 



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