Things are tough these days for any enterprise, for-profit or not. But consider the difficulty faced by the state's nursing homes -- and the illustration it provides of the need for new ways to provide and pay for government services in Minnesota.
Nursing homes are not government entities, but they might as well be. The rates they can charge their residents are set by state government. The same rate must be charged all residents, be they private payers or Medicaid recipients -- the latter constituting about two-thirds of the nursing-home population. More than three-fourths of nursing-home expenses go to staffing, with the number of staff and their qualifications determined by government regulations.
For years, the rates they've been allowed to charge have lagged behind costs. It's a gap that was already growing annually before the economy stumbled last year.
Growing out of financial difficulty is seldom an option. The state also has a moratorium on adding nursing-home beds, lifted only by exception.
The result: Salaries for the skilled staff in nursing homes lag well behind comparable wages in hospitals -- in the case of RNs, an average of $21,195 per year behind. Employer-provided health insurance for nursing assistants is becoming a thing of the past. Turnover is high.
More than 50 nursing homes have closed since 2000, bringing the total number of such facilities in Minnesota below 400 for the first time in decades. Waiting lists for nursing-home beds are developing. Families are forced to place frail loved ones farther from home, straining family ties when they are sorely needed.
And every year at the Capitol, it's the same story. Nursing-home lobbyists are forced to come begging for enough money to give their employees modest cost-of-living increases and continue to operate under the standards required by law. Every year, legislators of both parties give lip service to the need to pay for the long-term care needs of the state's most vulnerable and disadvantaged citizens. But many years in the past two decades, appropriations have not met that goal.
This year could be the worst yet for long-term care at the Capitol. The state's looming $5 billion-plus biennial budget shortfall makes the nursing-home industry's request for an additional $87 million over the next two years seem almost hopelessly unattainable, no matter how justified it is.
This is a pattern that badly needs to change. If it doesn't, many more nursing homes will close, and the quality of care in those that remain will unacceptably erode.
Fortunately, the nursing-home industry, advocates for seniors and key legislators of both parties all acknowledge the need for change. While they come at the problem in different ways, they share the view that state government is carrying too much of Minnesota's long-term care burden, and the state relies too much on costly institutional care.
A number of intriguing ideas have been floated that would change this picture over time. The state could create a tax-advantaged savings program to encourage more personal saving for long-term care needs. It could establish a low-cost social insurance system, modeled after Social Security, to cover a portion of the long-term care expenses of enrollees. The state fund that supports MinnesotaCare insurance could be tapped to jump-start such a program.
Funding long-term care through community-based consortiums, something already being tried, could be expanded, with an eye toward intensifying efforts to delay or prevent nursing-home stays.
An old idea is bound to be back as well. For years, the industry has sought permission to charge private-paying residents a higher rate than Medicaid pays -- something most states allow. It's a move that's been opposed by seniors advocates. This year's budget crisis compels another look at that possibility.
Long-term care is but one government-dependent activity that faces a bleak future without major reform. This year, legislators and Gov. Tim Pawlenty should embrace change, with the recognition that preserving the status quo is the riskier course.