Nursing Homes Renovate Identities In Search for Deep-pocketed Patients

By Nathaniel Popper

Published May 21, 2004, issue of May 21, 2004.
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SKOKIE, Ill. — Sitting in this northern suburb of Chicago, the Lieberman Geriatric Centre is part of a long Jewish tradition of caring for the neediest elderly members of the community. A total of 135 of the institution’s 240 coveted nursing home beds are filled by patients on Medicaid, the government health insurance for low-income elderly Americans.

Playing the role of last defense for poor Jews, though, has become increasingly difficult for Lieberman staff, as Medicaid rates have stagnated well below what it takes to care for the patients in an age of rapidly increasing medical costs. Each Medicaid patient brings the home $105 a day in government funding, while the average cost of care is closer to the $220 charged to private paying patients.

The gap recently has made for some noticeable changes around the home. Elegant floral curtains have gone up in the refurbished lobby and dining room, and a state-of-the-art rehabilitation room just opened on the second floor. All these changes, the Lieberman directors hope, will attract more private patients who can pay their way, instead of the Medicaid patients who lose the home money each day.

“Everybody wants to think that all our money and energy is going to people who can’t afford the care,” said Susan Swartz, a spokeswoman for Chicago’s Council for Jewish Elderly. “The reality is that, for our future, to take care of those people, we have had to change our message to bring in more wealthy people.”

A survey of the nursing home terrain shows that Jewish homes across the country are, reluctantly, being forced to find ways to replace lower-income Medicaid patients with private payers, who can foot the full bill. Just last year, a small fury erupted in St. Louis after the Jewish nursing home there replaced its old building with a luxurious new facility that has less than half as many beds for Medicaid patients.

“Nursing homes don’t want to be in the position they’re in,” said Deborah Cloud, a spokesman for the American Association of Homes and Services for the Aging, the umbrella body for nonprofit nursing homes, including all Jewish homes. “But Medicaid rates put them in a position where they have to choose between patients based on income levels.”

Medicaid is the single largest and most volatile source of funding for all Jewish social service providers, from family services to psychological counseling. Nursing homes, though, are particularly vulnerable to cuts in Medicaid. The program accounts for nearly half of all revenue generated by nursing homes across the country, with Jewish institutions attracting a particularly high ration of Medicaid patients.

At the Hebrew Rehabilitation Center for Aged, in Boston, which has regularly been rated one of the best homes in Massachusetts, 89% of the beds are occupied by Medicaid recipients. This has made for a $4 million structural deficit each of the last few years, according to Len Fishman, the CEO of the home, who previously oversaw the Medicaid program for former New Jersey governor Christine Todd Whitman.

Such financial crunches are helping to fuel an increasingly heated debate over Medicaid, as the federal government and states across the county weigh various cuts in an effort to close record budget deficits.

Medicaid funding — roughly 30% of which goes to nursing homes — is one of the largest and fastest-growing costs for state governments, and often has been the first program on the chopping block during the recent fiscal crises in state governments. In California, where the Medicaid program accounts for 13% of the state budget, Governor Arnold Schwarzenegger proposed cutting most reimbursement rates by 10% in his 2004-2005 budget, which translates into $881 million in cuts to the program.

Recently the federal government, which provides half the funding for Medicaid, also has looked to cut its contribution to the program. The House of Representatives’ budget resolution, passed April 11, contains $2.2 billion in suggested cuts to Medicaid over the next five years, down from the $11 billion in cuts recommended by the Senate budget resolution. These measures have been contentious, with 29 congressional Republicans writing a dissenting letter to the budget committee chairman, urging him “to refrain from proposing cuts to Medicaid spending.” As House and Senate leaders negotiate a final figure, lobbyists for nursing homes are scrambling to block any cuts before they are signed into law by the president.

“These cuts would create some major problems in terms of funding,” said Harvey Tillipman, executive director of the Association of Jewish Aging Services.

As a state administered program, Medicaid’s reimbursement rates vary from state to state. In Illinois the average rate of reimbursement for nursing homes is $89, while Massachusetts provides $133 a day. According to Cloud, though, in almost no state does the average rate cover the full level of care at nonprofit homes, which makes up a quarter of all long-term care facilities.

Before Medicaid was created in 1965, local Jewish federations frequently would cover budget gaps facing Jewish nursing homes. And, even today, many federations still provide a great deal of funding to local nursing homes. In Chicago, the federation provided the Lieberman Centre with $500,000 last year.

“Without the federation we would not stay open,” said Barbara Wexler, the director of the Lieberman Centre.

Covering the full costs of caring for the indigent, however, has become an impossible task for most federations in an era of spiraling medical costs. Such costs have become particularly unwieldy at nursing homes due to the nationwide shortage of nursing professionals.

Wexler estimated that the Lieberman Centre has been unable to find full-time employees for 20% of its nursing positions. This has forced the home to pay employees overtime or hire temporary help from a nursing agency, which charges almost twice Lieberman’s going wages. Bringing in new employees each day has the potential to negatively affect patient care in a business where, experts say, establishing personal relationships with medical professionals is often the most important factor in pleasing the elderly.

Even with the rising costs, many secular, for-profit nursing homes have found ways to make money serving Medicaid patients. Nationwide, at all for-profit and nonprofit homes, Medicaid pays 93 cents for each dollar of care. The for-profit innovations ensure that there will be a place for all Medicaid patients in need of long-term care. But Jewish communal leaders worry that such institutions will fail to provide the same level of care and services as nonprofit ones.

For starters, for-profit homes often fail to provide kosher food and Jewish religious counseling. In addition, studies have shown that these homes also provide much lower levels of nurse staffing and programming.

At the Lieberman Centre, the staff has built up a wide array of arts and music programs for residents, who recently put on a production of “Fiddler on the Roof” with Lazar Wolf played by a sprightly 102-year-old woman.

Now, facing the pincers of Medicaid rates, rather than cutting costs, many Jewish homes are turning to expand amenities in search of a new clientele that can pay for them.

At the annual meeting of the Association of Jewish Aging Services, in March, one of the central panels was devoted to discussing how homes can “broaden their market appeal to serve a broader income range of seniors through a continuum of care.”

The Hebrew Rehabilitation Center for the Aged was one of the first to reach out for new sources of funding. Ten years ago, the directors started a residential society for wealthier elderly members of the community, which has helped supplement the nursing home’s income. Such residential communities, and other services like home health care, also help keep many patients in their own homes rather in nursing homes, where the cost of 24-hour supervision immediately skyrockets.

Fishman said that at the time that the Hebrew home began the market-rate residential community, most other aging organizations “strongly disagreed with the choice to focus programs on people who can pay for it.”

That view, though, Fishman said, “is really changing now as others realize that a good program cannot be supported without private dollars.”






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