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. 1995 Fall;17(1):183–199.

Variations and Trends in State Nursing Facility Capacity: 1978-93

Richard DuNah Jr, Charlene Harrington, Barbara Bedney, Helen Carrillo
PMCID: PMC4193570  PMID: 10153471

Abstract

The demand for nursing facility (NF) beds has been growing with the aging of the population and many other factors. As the need for nursing home care grows, the Nation's capacity to provide such care is the subject of increasing concern. This article examines licensed NFs and beds, presenting data on trends from 1978-93. Measures of the adequacy of NF beds in States are examined over time, including the ratio of beds per aged population, occupancy rates, and State official's opinions of the adequacy of supply. State and regional variations are shown over time, and we speculate on the factors which may be associated with the variation.

Introduction

NF services accounted for approximately $70 billion (8 percent) of total health care expenditures in the United States in 1993 (Levit et al., 1994). The increase in NF expenditures was 6.3 percent from 1992 to 1993. These increases in costs are particularly troublesome to the Medicaid program, which paid for 52 percent of the Nation's NF expenditures in 1993. Other government sources pay 11 percent of the costs. The large State and Federal NF expenditures have drawn the attention of policymakers and researchers to supply and demand factors for NF services.

Background

Demand

The demand for NF services is growing with the increasing numbers of individuals who are aged and chronically ill. In 1990, there were about 32 million Americans 65 years of age or over; this number is projected to increase to 64 million in 2030 (Zedlewski and McBride, 1992). As the population ages and develops chronic illnesses, the need for long-term care (LTC) services, including NF services, increases. The total risk for becoming a nursing home patient after 65 years of age is 43 percent, peaking at 75-80 years of age (Murtaugh, Kemper, and Spillman, 1990). The number of elderly needing NF care is expected to increase from about 1.8 million in 1990 to 4.3-5.3 million in 2030, depending on the projection assumptions (Zedlewski and McBride, 1992; Mendelson and Schwartz, 1993). The number of aged and level of demand for LTC services vary across States.

Several Federal policy changes during the 1980s contributed to an increase in NF demand and government expenditures for NF services. The adoption of the prospective payment system (PPS) for inpatient hospital stays by Medicare in 1983 resulted in shortened hospital stays and increased the number of referrals and admissions to NFs (Guterman et al., 1988; Neu and Harrison, 1988; U.S. House of Representatives, 1990; Latta and Keene, 1989). In April 1988, HCFA issued new Medicare clarifying guidelines regarding the administration of Medicare NF payments which expanded coverage (U.S. House of Representatives, 1990). The 1988 Medicare Catastrophic Coverage Act also expanded Medicare nursing home coverage, but was repealed in 1989, with no overall increase. Additional 1988 legislation established a minimum level of asset and income protection for spouses when determining Medicaid NF eligibility, also contributing to an increase in Medicaid program costs (Letsch et al., 1992). These policy changes have all encouraged the demand for NF services, thereby increasing the costs of Medicaid and Medicare.

States have adopted policies to control Medicaid NF demand, including Medicaid eligibility policies and preadmission screening programs (PAS) (Health Care Financing Administration, 1992a, 1992b; Ellwood and Burwell, 1990; Harrington, Curtis, and DuNah, 1994b). These policies may have had a constraining effect on demand and, consequently, the growth in NF capacity.

Alternatives to or substitutes for nursing home care are expanding rapidly, which may reduce the demand for such care. The number of home health agencies, the volume of home health care services, and Medicare coverage for such services have dramatically increased during the last 5 years (Letsch et al., 1992; National Association for Home Care, 1992). In addition, States have attempted to expand alternatives to institutional care under the Medicaid home and community-based waiver programs established in 1981. Several legislative changes have further expanded Medicaid waivers (Health Care Financing Administration, 1992a; Gurney, Hirsch, and Gondek, 1992). These programs have increased the utilization of home and community-based services to meet the demand for long-term care (Justice, 1988; Miller, 1992; Lipson and Laudicina, 1991; Folkemer, 1994).

Supply

The capacity of NFs to meet the demand for services has been strained during the past decade. Previous studies have shown that growth has failed to meet the demand in some areas (Feder and Scanlon, 1980; Scanlon, 1980a, 1980b; Nyman, 1985, 1989a, 1989b; Bishop, 1988). There are substantial variations in State capacity; some States may even have an oversupply of NF beds (Swan and Harrington, 1986; Wallace, 1986; Harrington et al., 1992; Swan et al., 1993b).

State Medicaid programs have undertaken a number of policy initiatives to control supply and reduce NF spending. This began in the early 1980s, when Federal budget cuts to State Medicaid programs became standard features of the budget process (Bishop, 1988). The two most important policies affecting the supply of LTC bed supply are State certificate-of-need (CON) programs and State Medicaid reimbursement rates.

The health planning and CON program established in 1974 (Public Law 94-641) gave States considerable authority and discretion to plan and control capital expenditures for NFs and other health facilities (Kosciesza, 1987). The effectiveness of CON policies in controlling bed supply has been widely debated, and the policies opposed by many providers (Cohodes, 1982; Friedman, 1982; Swan and Harrington, 1990; Mendelson and Arnold, 1993). These controversies resulted in the Federal repeal of the program in 1986 (Kosciesza, 1987). Even after the Federal repeal of the program, 44 States continued to use CON and/or moratorium policies to regulate the growth in nursing homes (Harrington, Curtis, and DuNah, 1994a).

Many State Medicaid programs have made efforts to control the growth in NF reimbursement rates (Swan, Harrington, and Grant, 1993; Swan et al., 1993a; Holahan and Cohen, 1987; Bishop, 1988; Nyman, 1988; Holahan et al., 1993). State variations in reimbursement methods and rates create major differences in facility revenues which can in turn impact the financial viability of LTC facilities and the quality of care (Nyman, 1989a). Medicaid spending on NFs and intermediate care facilities for the mentally retarded (ICFs/MR) has declined from 39 percent in 1980 to 31 percent (of $112.8 billion) in 1993 as a proportion of total Medicaid spending (Levit et al., 1994; Letsch et al., 1992).

Market Effects

Medicaid NF days of care accounted for a major proportion of all patient days in facilities (estimated to be 73 percent of days in 1991 [HCIA, Inc. and Arthur Andersen & Company, 1994]). Nevertheless, most nursing homes prefer private clients because facilities can generally charge private-paying residents higher daily rates than Medicaid (Phillips and Hawes, 1988). NFs also tend to prefer those patients who are the least sick or for whom they can provide the most cost-efficient care (except in States where Medicaid case-mix-reimbursement methods encourage the admission of individuals with greater disabilities). When nursing homes are selective in their admission policies, access to those individuals with the greatest need may be limited. Where the supply of NF beds is limited, problems in gaining access to needed services may be exacerbated (Falcone et al., 1991; Kenney and Holahan, 1990).

Methodology

The primary data on licensed NFs and beds for this study were collected directly from State officials by the authors. The State officials contacted were those with data on licensed NFs. Generally, data came directly from the licensing and certification program of the State, but some States reported data from an office of research and health statistics or an LTC office. Since each State has its own organizational structure for collecting and maintaining these data, the initial surveys involved making a number of calls to each State in order to identify the appropriate contact office. These data were collected in a series of separate State telephone surveys in 1983, 1986, 1989, 1992, and 1993.

The State surveys conducted for this study were designed to include all State-licensed NFs and beds in both freestanding and hospital facilities and to eliminate any duplicate counting of beds. Facilities licensed as residential care (or board and care) were not included in this study, nor were any ICFs/MR (Hawes, Wildfire, and Lux, 1993; Lakin et al., 1993; Harrington et al., 1994). Swing beds licensed as acute-care beds were also not included (Dubay, 1993). Because each State has developed its own licensing requirements, minimum State requirements vary, but Federal NF certification requirements are uniform across States. This survey does not examine the specific components of State licensing requirements, but the survey identifies the licensed NF capacity in States. Facility beds must be licensed by States in order to be eligible to be certified for Medicare or Medicaid residents.

Historically, the Federal certification requirements made a distinction between skilled nursing facilities (SNFs) and intermediate care facilities (ICFs); most State licensing requirements also made a distinction between these two types. Because the categories for SNF and ICF licenses were not uniform across States, the Omnibus Budget Reconciliation Act of 1987 National Nursing Home Reform legislation removed the distinctions between SNFs and ICFs. This legislation was implemented in 1990. Thus, the data presented here show all licensed nursing homes combined into one category, NFs. Some States make distinctions in the level of care for residents within facilities and may continue to use the terms SNF and ICF to describe categories of residents.

This article updates earlier published studies on State data presented for the 1978-88 period, and makes corrections in those data where reports were changed by States (Harrington et al., 1992). Data were collected by telephone in all four surveys using a structured questionnaire that requested specific data on the number, types, level, and certification status of facilities and beds, as well as occupancy rates. State officials from the principal State agency responsible for data were asked to report on NFs and beds for December of each calendar year. Where possible, State officials were asked to send actual reports and data on beds and facilities so that data could be verified. All States and the District of Columbia voluntarily participated in the study by providing data. State-reported data could not be verified independently in this study; by necessity, the authors have depended on official data and reports from States.

Findings

Total Nursing Facilities and Growth Rates

The total number of combined NFs (both freestanding and hospital-based) is shown in Table 1. The number of NFs in the Nation increased from 14,264 (1978) to 16,959 (1993), an increase of 19 percent From 1978 to 1993, most States had increases in facilities, especially Arizona, Delaware, and New Mexico; only 8 States had reductions in facilities. Rather than increasing the number of NFs in a State, facilities increased their average number of beds. The national average number of beds per facility increased from 92 beds in 1978 to 102 beds in 1993, which amounts to an 11-percent increase in facility size during the 16-year period. The Northeast Region had the highest average bed size and the West the lowest.

Table 1. Total Number of Licensed Nursing Home Beds and Facilities, by State and Census Region: 1978-93.

State and Census Region Beds Facilities
1978 1982 1986 1990 1993 Percent Growth 1978-93 1978 1982 1986 1990 1993 Percent Growth 1978-93
Total 1,309,223 1,423,488 1,528,341 1,659,651 1,736,415 32.6 14,264 14,802 15,304 16,367 16,959 18.9
Alabama 19,879 21,306 21,970 22,555 23,363 17.5 189 192 214 217 224 18.5
Alaska 923 839 928 1,016 11,033 11.9 18 18 19 21 122 22.2
Arizona 5,354 7,148 13,761 16,051 16,444 207.1 67 75 124 136 148 120.9
Arkansas 18,548 19,981 22,115 22,533 24,306 31.0 210 218 252 247 237 12.9
California 110,826 112,922 115,803 123,870 128,411 15.9 1,256 1,252 1,223 1,352 1,397 11.2
Colorado 20,066 18,203 18,109 20,115 20,019 -0.2 184 182 192 210 226 22.8
Connecticut 24,169 26,221 27,628 29,172 31,308 29.5 293 287 303 332 347 18.4
Delaware 2,762 3,508 3,906 4,465 25,552 101.0 27 36 43 46 257 111.1
District of Columbia 1,881 1,973 2,849 3,054 3,195 69.9 12 15 17 19 19 58.3
Florida 34,939 41,578 51,863 64,472 72,714 108.1 333 378 456 559 612 83.8
Georgia 30,588 34,780 34,742 37,148 39,145 28.0 358 358 345 351 361 0.8
Hawaii 2,381 2,629 2,953 3,401 3,497 46.9 32 34 33 40 43 34.4
Idaho 4,454 4,690 4,910 5,551 5,916 32.8 60 64 64 71 78 30.0
Illinois 87,262 89,699 92,874 97,655 103,501 18.6 759 746 735 836 846 11.5
Indiana 41,578 50,414 51,893 58,482 59,683 43.5 492 504 528 572 589 19.7
Iowa 30,369 32,098 33,296 32,737 335,708 17.6 408 430 455 460 479 17.4
Kansas 25,910 26,263 27,105 30,383 29,783 14.9 391 385 390 427 444 13.6
Kentucky 16,167 18,487 20,439 22,657 24,586 52.1 261 300 233 249 286 9.6
Louisiana 22,541 26,100 33,853 37,277 37,862 68.0 235 229 307 317 339 44.3
Maine 8,693 8,919 9,758 9,909 10,129 16.5 162 152 165 164 145 -10.5
Maryland 19,322 22,259 23,934 26,899 28,850 49.3 175 199 207 224 229 30.9
Massachusetts 43,295 42,868 45,831 51,165 53,479 23.5 584 552 529 567 566 -3.1
Michigan 46,026 46,128 48,857 51,496 50,947 10.7 447 436 448 453 452 1.1
Minnesota 40,061 42,641 45,024 44,890 44,887 12.0 442 438 446 447 445 0.7
Mississippi 11,424 13,793 15,201 15,322 16,251 42.3 158 170 176 166 173 9.5
Missouri 35,779 44,450 48,594 55,444 57,321 60.2 456 510 547 594 614 34.6
Montana 6,270 6,124 6,531 6,434 16,465 3.1 92 97 97 95 195 3.3
Nebraska 18,284 18,325 18,600 19,489 19,513 6.7 225 226 228 242 243 8.0
Nevada 2,009 2,256 2,534 3,123 3,623 80.3 25 27 32 32 35 40.0
New Hampshire 5,952 6,629 6,732 6,834 7,240 21.6 66 71 68 80 78 18.2
New Jersey 29,545 34,381 39,993 47,333 48,720 64.9 188 292 290 352 355 88.8
New Mexico 2,910 4,075 5,706 6,468 6,845 135.2 38 51 63 84 81 113.2
New York 90,178 94,210 98,747 103,714 110,180 22.2 551 586 605 623 646 17.2
North Carolina 17,424 21,869 23,540 27,675 37,801 116.9 199 229 251 300 393 97.5
North Dakota 5,956 6,599 6,800 6,942 7,071 18.7 87 97 95 92 84 -3.4
Ohio 65,126 74,164 83,991 90,529 90,860 39.5 903 942 1,001 969 988 9.4
Oklahoma 26,270 27,664 30,113 33,204 34,457 31.2 369 377 385 409 415 12.5
Oregon 14,653 15,221 15,357 15,395 14,811 1.1 200 193 192 187 177 -11.5
Pennsylvania 66,673 76,759 84,148 87,885 92,529 38.8 633 665 669 694 730 15.3
Rhode Island 8,228 8,851 9,759 9,976 10,463 27.2 112 109 110 106 105 -6.2
South Carolina 9,875 12,462 12,389 14,422 16,211 64.2 109 127 134 152 174 59.6
South Dakota 7,386 7,701 7,851 8,186 8,256 11.8 117 117 115 116 115 -1.7
Tennessee 18,505 26,206 29,708 35,010 36,708 98.4 209 251 274 302 319 52.6
Texas 97,709 101,235 104,160 118,305 122,843 25.7 973 1,000 1,031 1,166 1,242 27.6
Utah 5,758 5,406 6,239 7,175 7,125 23.7 92 86 93 95 100 8.7
Vermont 2,852 2,970 3,367 3,650 3,645 27.8 48 46 48 51 50 4.2
Virginia 16,283 21,477 22,735 28,058 130,738 88.8 163 187 191 251 1282 73.0
Washington 28,225 27,378 26,345 29,059 28,703 1.7 310 304 293 302 289 -6.8
West Virginia 5,451 7,153 8,838 10,196 10,797 98.1 79 92 104 121 127 60.8
Wisconsin 50,542 52,378 53,648 49,871 49,705 -1.7 440 442 453 434 423 -3.9
Wyoming 1,962 2,098 2,314 2,999 3,216 63.9 27 28 31 35 35 29.6
Census Region
North Central 454,279 490,860 518,533 546,104 557,235 22.7 5,167 5,273 5,441 5,642 5,722 10.7
Northeast 279,585 301,808 325,963 349,638 367,693 31.5 2,637 2,760 2,787 2,969 3,022 14.6
South 369,568 421,831 462,355 523,252 565,379 53.0 4,059 4,358 4,620 5,096 5,489 35.2
West 205,791 208,989 221,490 240,657 246,108 19.6 2,401 2,411 2,456 2,660 2,726 13.5
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1

Number estimated from historical growth.

2

1993 number includes a few facilities called residential homes that were licensed nursing homes; previous years did not include these facilities.

3

Hospital-based nursing home beds are not licensed.

SOURCE: DuNah, R., Harrington, C., Bedney, B., and Carillo, H., University of California, 1994.

Nursing Facility Beds and Growth Rates

The total number of beds increased from 1.3 million in 1978 to 1.74 million in 1993, a 33-percent increase during the 16-period (Table 1). She large States have 37 percent of the total NF beds in the United States (California, Illinois, New York, Ohio, Pennsylvania, and Texas).

Certain States had a particularly large amount of bed growth from 1978 to 1993, with the highest rate in Arizona (207 percent). Other States, such as Wisconsin and Colorado, had little or negative bed growth during this period. The growth rates varied by census region. Total NF bed growth was 53 percent in the South, 32 percent in the Northeast, 23 percent in the North Central Region, and only 20 percent in the West. Thus, the growth in the South was more than two times greater than in the North Central and the West.

Adequacy of Nursing Home Bed Supply

One difficult issue is how to determine the adequacy of the existing NF bed capacity. Four measures of the adequacy of NF bed supply are discussed here: bed ratios per population 65 years of age or over; bed ratios per population 85 years of age or over; occupancy rates; and the opinion of State officials about the adequacy of supply. These three objective and one subjective measures show relationships across States and regions in comparison to the means, but the measures are unable to suggest the ideal capacity in a State or region.

Bed Ratios per Population 65 Years of Age or Over

The U.S. population has been aging rapidly. The total number of persons 65 years of age or over grew from 11 percent of the population in 1978 to 12.7 percent in 1993. One key concern is whether the growth in beds is keeping pace with the aging of the population. Table 2 shows that the average bed ratio for the United States was 53.4 beds per 1,000 persons 65 years of age or over in 1978. The ratio was 53.0 beds in 1993; thus, the U.S. ratio has remained essentially flat during the last 16 years.

Table 2. Ratio of Licensed Nursing Home Beds per 1,000 Population 65 Years of Age or Over and per 1,000 Population 85 Years of Age or Over, by State and Census Region: 1978-93.
State and Census Region 65 Years of Age or Over 85 Years of Age or Over
1978 1982 1986 1990 1993 Percent Growth 1978-93 1978 1982 1986 1990 1993 Percent Growth 1978-93
Total 53.4 53.1 52.7 53.2 53.0 -0.9 610.3 559.5 537.0 520.3 490.5 -19.6
Alabama 47.3 46.4 44.8 43.2 42.9 -9.4 597.8 538.2 488.0 430.7 398.2 -33.4
Alaska 92.3 62.9 53.2 45.3 39.2 -57.5 1426.6 998.8 833.0 677.8 578.7 -59.4
Arizona 19.2 20.9 33.5 33.4 31.1 62.1 308.9 305.0 460.4 416.6 350.2 13.4
Arkansas 61.8 62.1 65.6 64.4 67.1 8.5 752.7 689.3 689.0 611.3 597.1 -20.7
California 48.2 44.2 40.6 39.6 38.9 -19.3 534.6 461.8 419.3 405.8 379.0 -29.1
Colorado 84.7 69.2 61.7 60.8 56.0 -33.8 860.6 677.5 600.8 590.5 521.3 -39.4
Connecticut 69.3 67.7 65.9 65.5 67.8 -2.2 706.9 652.0 638.3 609.1 595.3 -15.8
Delaware 49.3 55.5 54.3 55.2 63.8 29.3 556.0 587.6 571.5 606.6 680.2 22.4
District of Columbia 25.8 26.7 37.2 39.6 41.5 61.1 257.2 237.1 303.1 330.7 321.0 24.8
Florida 22.3 22.8 24.9 27.2 28.6 28.4 337.7 303.2 305.8 305.1 294.3 -12.9
Georgia 62.7 63.6 57.9 56.8 56.3 -10.2 830.1 771.3 666.3 606.7 558.0 -32.8
Hawaii 34.0 30.8 28.3 27.3 25.6 -24.7 478.7 403.7 353.7 323.2 288.9 -39.7
Idaho 50.6 46.4 44.2 45.6 45.6 -10.0 571.5 505.9 477.2 476.8 438.9 -23.2
Illinois 71.2 68.6 67.6 68.1 70.0 -1.7 785.0 699.0 661.8 639.4 622.0 -20.8
Indiana 73.3 82.5 79.4 83.9 82.0 11.8 807.0 853.4 790.2 806.2 758.2 -6.1
Iowa 79.9 80.5 80.5 76.8 81.9 2.5 707.9 655.3 639.7 593.3 612.5 -13.5
Kansas 86.7 83.4 82.3 88.6 84.4 -2.6 809.4 720.5 677.7 704.2 636.0 -21.4
Kentucky 40.8 43.7 46.1 48.6 51.0 25.0 483.7 472.6 470.9 472.5 469.5 -2.9
Louisiana 58.1 63.0 75.8 79.6 77.7 33.7 695.9 666.0 741.1 714.0 662.0 -4.9
Maine 63.9 61.0 63.1 60.6 59.5 -6.8 635.6 553.4 555.1 520.6 490.4 -22.8
Maryland 51.3 52.7 50.8 52.0 52.5 2.5 635.9 590.3 554.2 554.8 525.0 -17.4
Massachusetts 61.2 57.1 58.1 62.6 63.5 3.7 590.3 507.7 508.3 536.3 520.1 -11.9
Michigan 52.5 48.0 47.3 46.4 43.5 -17.2 591.7 505.0 494.3 469.4 421.5 -28.8
Minnesota 86.0 85.5 86.1 82.0 79.0 -8.1 794.0 714.6 696.1 640.9 601.7 -24.2
Mississippi 40.9 46.4 49.1 47.9 49.4 20.6 471.1 483.1 475.4 424.2 410.4 -12.9
Missouri 56.5 67.0 70.6 77.3 77.3 36.8 601.8 648.0 646.2 665.6 627.0 4.2
Montana 77.4 67.9 66.0 60.3 57.3 -25.9 721.9 643.8 664.7 596.5 532.4 -26.2
Nebraska 90.5 87.0 85.8 87.3 85.3 -5.8 809.6 707.6 667.6 663.8 621.6 -23.2
Nevada 34.6 29.6 25.8 24.2 23.4 -32.3 621.4 500.4 436.2 397.2 359.6 -42.1
New Hampshire 60.7 61.0 57.4 54.6 54.0 -11.1 646.8 603.3 539.2 492.2 461.1 -28.7
New Jersey 35.6 38.1 41.1 46.0 45.5 27.6 419.6 413.3 438.6 473.0 439.1 4.6
New Mexico 27.2 32.5 39.9 39.6 38.5 41.7 339.4 387.4 453.1 424.4 388.7 14.5
New York 42.5 42.8 43.3 44.2 46.1 8.5 457.2 410.4 397.7 390.2 387.3 -15.3
North Carolina 30.8 33.9 32.5 34.4 43.7 41.9 422.7 421.9 383.0 378.4 453.8 7.4
North Dakota 76.4 78.8 77.5 76.1 75.2 -1.5 730.7 723.2 671.1 610.8 560.5 -23.3
Ohio 57.6 60.6 63.9 64.3 61.4 6.6 627.6 614.9 647.9 640.2 586.2 -6.6
Oklahoma 72.0 71.6 74.4 78.3 78.3 8.9 822.5 749.3 728.7 707.9 664.9 -19.2
Oregon 50.9 47.2 43.0 39.3 35.4 -30.4 542.9 478.1 427.3 383.9 328.1 -39.6
Pennsylvania 45.2 47.9 48.8 48.1 48.5 7.3 530.5 521.7 523.8 495.0 468.6 -11.7
Rhode Island 66.9 66.8 68.6 66.4 67.7 1.2 722.8 653.6 664.0 628.2 603.0 -16.6
South Carolina 36.7 40.2 35.2 36.4 38.0 3.6 533.2 528.8 449.5 437.4 422.4 -20.8
South Dakota 83.0 82.0 80.0 79.9 78.3 -5.7 733.2 667.5 623.4 607.1 577.4 -21.3
Tennessee 37.5 48.5 51.2 56.6 56.4 50.3 479.7 560.5 553.6 567.2 528.2 10.1
Texas 74.9 70.6 66.6 68.8 66.9 -10.7 952.4 810.7 718.9 693.8 635.1 -33.3
Utah 55.9 45.6 46.7 47.6 43.2 -22.7 683.0 539.2 538.8 517.2 438.2 -35.8
Vermont 50.9 49.4 53.4 55.2 52.6 3.3 487.2 448.6 467.2 465.0 427.0 -12.4
Virginia 34.0 40.0 37.9 42.2 43.2 27.0 420.7 450.7 411.1 447.1 435.9 3.6
Washington 69.2 59.3 50.9 50.4 46.9 -32.2 719.1 598.2 516.7 508.4 449.1 -37.6
West Virginia 23.7 29.1 34.4 38.0 38.9 64.0 285.0 329.3 362.0 381.8 372.6 30.7
Wisconsin 92.7 89.0 86.4 76.5 73.6 -20.7 955.8 840.4 779.8 662.0 603.6 -36.9
Wyoming 54.5 53.3 54.5 63.4 62.7 15.1 573.9 538.4 538.8 626.5 592.9 3.3
Census Region
North Central 70.0 70.6 70.5 70.4 69.1 -1.2 729.5 679.9 659.9 636.8 597.4 -18.1
North East 47.4 48.0 49.0 50.2 51.1 7.7 516.8 477.7 475.5 470.3 453.6 -12.2
South 45.9 47.2 47.1 48.8 49.8 8.4 594.5 552.9 520.7 504.2 481.3 -19.1
West 50.6 45.5 42.7 41.7 39.9 -21.2 571.7 488.9 454.8 436.5 395.6 -30.8
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SOURCE: DuNah, R., Harrington, C., Bedney, B., and Carrillo, H., University of California, 1994.

The ratio of beds in 1993 varied from a high of 84 beds per 1,000 persons 65 years of age or over in Kansas to a low of 26 beds in Hawaii. The ratio is highest in the North Central Region (69 per 1,000 in 1993). The Northeast and Southern States were about average. The West was well below the national average in terms of bed to population ratios (40 beds per 1,000).

Bed Ratios per Population 85 Years of Age or Over

The percent of the U.S. population 85 years of age or over, the population most at risk for NF services, increased 40 percent from 1978-93. Table 2 shows that the average number of beds dropped from 610 per 1,000 persons 85 years of age or over in 1978 to 491 in 1993 (a 19.6-percent decline). The trend was downward for every year during the period. Only 10 States and the District of Columbia increased the number of beds per population 85 years of age or over during the 16-year period. Some observers would argue that the trends in State bed ratios would be expected to regress to the U.S. mean ratio over time. This appeared to occur for those States with above average bed ratios: 26 States with above average bed ratios in 1978 declined toward the mean ratio for the 85 years of age or over population in 1993, compared with only 1 State which increased its ratio. For the States with below average bed ratios in 1978, 10 increased toward the mean and 14 continued to decline below the mean in 1993. The States with the largest declines were in the West (a 21-percent decline). Thus, the regression to the mean may have occurred for States with higher-than-average ratios, but a majority of States with low ratios continued to decline.

Variation across States and regions for persons 85 years of age or over were similar to those for the population 65 years of age or over (Pearson correlation was 0.93 between the two ratios, p < 0.0001). The North Central Region had the highest ratio (597 beds per 1,000 population 85 years of age or over) and the West had the lowest (395 beds) in 1993. Population growth among those 85 years of age or over was fastest in the South (89 percent from 1978-93) and West (73 percent), so that the growth in beds did not keep pace with the population growth in those regions. Thus, the beds per 85 years of age or over population declined the most in the West (31 percent), the South (19 percent), and the North Central Regions (18 percent).

Occupancy Rates

In 1978, the average NF occupancy rate for the 25 reporting States was 90.3 percent. Average occupancy rates for the United States gradually increased to a high of 92.8 percent in 1984, then declined to 91 percent in 1992 and 1993. Although NF occupancy rates were generally high, States did show a wide range in rates. The lowest rates were in Indiana, Missouri, Texas, and Utah (82 percent in 1993) (Table 3). On the other hand, some States had extremely high occupancy rates, such as New York, which reported a 99-percent occupancy rate. Occupancy rates were highest in the Northeastern States (97 percent in 1993), about average in the Southern and North Central States, and lowest in the West (88 percent) in 1993. Of the 31 States reporting in 1993, 13 reported occupancy rates less than the mean and 7 States had rates at 96 percent or greater.

Table 3. Nursing Home Bed Ratios, Occupancy Rates, and Opinions of Adequacy, by State and Census Region: 1993.
State Ratio of Beds per 1,000 Population 85 Years of Age or Over Occupancy Rate Opinion of Adequacy
n Rank n Rank
Total 490 — 91 — —
Alabama 398 41 96 8 Undersupply
Alaska 579 18 NA NA Oversupply
Arizona 350 47 NA NA Oversupply
Arkansas 597 14 NA NA Adequate Supply
California 379 44 NA NA Adequate Supply
Colorado 521 25 92 14 Adequate Supply
Connecticut 595 15 NA NA Oversupply
Delaware 680 2 84 25 Oversupply
District of Columbia 321 49 NA NA Undersupply
Florida 294 50 92 13 Adequate Supply
Georgia 558 21 NA NA Oversupply
Hawaii 289 51 95 9 Undersupply
Idaho 439 34 89 22 Adequate Supply
Illinois 622 8 NA NA Adequate Supply
Indiana 758 1 82 29 Oversupply
Iowa 612 10 NA NA Adequate Supply
Kansas 636 5 89 21 Adequate Supply
Kentucky 469 28 98 2 Adequate Supply
Louisiana 662 4 88 23 Oversupply
Maine 490 27 NA NA Oversupply
Maryland 525 24 NA NA NA
Massachusetts 520 26 96 6 Oversupply
Michigan 421 39 91 18 NA
Minnesota 602 13 95 11 Oversupply
Mississippi 410 40 96 7 Undersupply
Missouri 627 7 82 28 Oversupply
Montana 532 22 NA NA Undersupply
Nebraska 622 9 91 17 Oversupply
Nevada 360 46 90 19 Adequate Supply
New Hampshire 461 30 95 11 Adequate Supply
New Jersey 439 33 NA NA Adequate Supply
New Mexico 389 42 NA NA Adequate Supply
New York 387 43 99 1 Adequate Supply
North Carolina 454 31 NA NA Adequate Supply
North Dakota 561 20 97 3 Oversupply
Ohio 586 17 NA NA Undersupply
Oklahoma 665 3 83 26 Oversupply
Oregon 328 48 83 27 Oversupply
Pennsylvania 469 29 NA NA Oversupply
Rhode Island 603 12 96 5 Adequate Supply
South Carolina 422 38 94 12 Undersupply
South Dakota 577 19 NA NA Adequate Supply
Tennessee 528 23 92 16 Adequate Supply
Texas 635 6 82 31 Adequate Supply
Utah 438 35 82 31 Oversupply
Vermont 427 37 NA NA Adequate Supply
Virginia 436 36 NA NA Oversupply
Washington 449 32 90 20 Oversupply
West Virginia 373 45 97 4 Adequate Supply
Wisconsin 604 11 92 16 Oversupply
Wyoming 593 16 87 24 Adequate Supply
Census Region
North Central 597 — 90 — NA
North East 454 — 97 — NA
South 481 — 91 — NA
West 396 — 88 — NA
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NOTE: NA is not available.

SOURCE: DuNah, R., Harrington, C., Bedney, B., and Carillo, H., University of California, 1994.

Opinion About the Adequacy of Supply

Table 3 shows State health planning official's opinions about the adequacy of NF bed supply, rated as under, over, or adequate in 1993. These data were collected from a survey of CON and State health planning officials in each of the States. The opinions of the officials were subjective and no effort was made by the investigators to specify what criteria officials should use in making their own judgment about the adequacy of supply. Based on the opinions of State officials in 1993, 20 States were rated as having an oversupply, 22 were rated as having an adequate supply, 7 were rated as having an undersupply, and 2 had no opinion.

Relationship of Adequacy Measures

Figure 1 shows the ratios of beds per 1,000 persons 85 years of age or over (average of 491 beds, with a standard deviation of 115.0) and the opinions about the adequacy of supply in 1993. For those States considered by officials to have an oversupply, the group-average bed ratio was 550 per 1,000 persons 85 years of age or over, which was higher than the U.S. average (491 beds). For those rated as having an adequate supply, the group-average and U.S.-average bed ratios were the same. For those States rated as having an undersupply, the group mean (423 beds) was well below the U.S. average, as would be expected.

Figure 1. Nursing Home Beds per 1,000 Population 85 Years of Age or Over, by State Opinion of Adequacy of Supply: 1993.

Figure 1

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Figure 2 shows the occupancy rates of NFs (average of 90.8 percent, with a standard deviation of 5.5 percentage points) and the opinions of State officials about the adequacy of supply in 1993. For those States rated by officials as having an oversupply, the group-average occupancy rates (88.1 percent) were below the U.S occupancy rate, as would be expected. For those States rated as having an adequate supply, the group-average occupancy rate (92 percent) was slightly higher than the U.S. average. For those States rated as having an undersupply, the group average (95.3 percent) was above the U.S. average, as expected.

Figure 2. Nursing Home Occupancy Rates, by State Opinion of Adequacy of Supply: 1993.

Figure 2

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To illustrate the relationships described, Indiana has a reported oversupply of beds. It had the highest bed ratio to the 85 years of age or over population of any State (758 beds 1,000), the lowest average occupancy rate among the States (82 percent), and an oversupply rating by the State planning office. The bed growth in Indiana from 1978 to 1993 (44 percent) was higher than the national average (33 percent), but the ratio of beds to the 85 years of age or over population declined by 6 percent overall. West Virginia is an example of a State with a reported undersupply of beds. The ratio of beds per person 85 years of age or over was lower than the national average (491 beds per 1,000). Its average occupancy rate was high, at 97 percent, and the State was rated as having an undersupply by the State health planning office. Its bed growth was 98 percent from 1978 to 1993, which was higher than the growth in the aged population in the State. Nevertheless, the ratio of beds to population remained low, because it had the second lowest ratio among the States in 1978 and was not able make up these historically low bed ratios.

The situation in some other States is more complex than in the prior two examples. For example, Nevada had low bed ratios and a low average occupancy rate, whereas North Dakota had high bed ratios and a high average occupancy rate. In other States, the opinions of officials are not consistent with the ratios of beds and occupancy rates. One example is New York, which has the highest reported occupancy rate of any State (99 percent), and yet officials did not rate the State as having an undersupply of beds. The official opinion about adequacy of bed supply may be based on whether or not a State is willing to allow for the expansion of beds, rather than measures of population ratios or occupancy rates.

Although the relationship between occupancy and bed ratios is complex, they are correlated. As would be expected, occupancy rates are inversely correlated with bed ratios (r = -.40, p < 0.01). An opinion of over-supply was given a value of 3, adequate supply was given a value of 2, and undersupply a value of 1. A logit regression analysis was conducted to determine the joint effect of bed ratios and occupancy rates on the official opinion of the adequacy of supply (for the 39 States with complete data). The bed ratios (chi-square score for covariates was 7.55 with 2 df, p = 0.023) and for occupancy rates (chi-square score for covariates was 6.8 with 2 df, p = 0.033) showed that the relationships were significant.

Discussion

The NF industry continues to be of central importance as a provider of LTC. The demand for NF services has increased with the growth in the aged population. The growth in NF beds shows a slow but steady increase across the States from 1978 to 1993. Although the bed growth rate was steady, it did not keep pace with the increase in the population 85 years of age or over during the 16-year period.

This article examined the issue of whether the supply of NF beds was adequate by examining the ratio of beds per population, occupancy rates, and opinions of State officials. Although this article cannot reach conclusions about the adequacy of supply, these measures allow for comparisons across States. These data suggest that some States may have an oversupply of beds, while others appear to have an undersupply.

An oversupply of beds could increase the costs to the Medicaid program if the oversupply encouraged inappropriate placement of residents. On the other hand, an oversupply could allow for greater competition among facilities on a cost and/or quality basis. Having an oversupply, however, does not necessarily guarantee improved access to Medicaid recipients, depending on the State Medicaid reimbursement rate and the market. This appears to be less of a problem than having an undersupply of beds, where access to needed care might be denied. Future studies should use multiple factors to predict the need for NF beds which can be compared with the actual supply to address the question of which States may have an adequate supply or a supply problem.

Another major finding is the wide differences in the ratios of beds per aged population and occupancy rates across States and regions. The lowest ratios of beds per aged population occur in the West and the highest levels of beds occur in the North Central Region. The occupancy rates are highest in the Northeast, resulting in a potential access problem for those needing care. Where States have more beds available per aged population, they generally have lower occupancy rates.

A key research question is what explains the wide differences in the ratios of beds per aged population and occupancy rates across States and regions. Many factors are probably associated with variations in growth rates, bed to population ratios, occupancy rates, and perceived adequacy of supply. Variations in the restrictiveness of State CON and moratorium policies designed to control bed stock are probably an important factor. A recent study showed that the number of years that States had a CON/moratorium in place was negatively correlated with the percent of bed growth and the ratio of beds per population 85 years of age or over and positively associated with State occupancy rates (Harrington, Curtis, and DuNah, 1994a).

Low State Medicaid NF rates can also have a critical effect on reducing the supply for nursing home services, which could also account for some of the variation in NF growth rates across States (Swan, Harrington, and Grant, 1993; Swan et al., 1993a). Low rates may reduce facility revenues, which can then impact negatively on the financial viability of NFs, and may reduce the general level of public and private investments made in new NFs and beds. Many other factors may directly affect the supply. Decisions to expand beds may be more likely to occur in areas where there is a large proportion of elderly, high growth in the elderly population, and/or high-income elderly groups (to allow for more private-paying patients). On the other hand, areas with high input prices, such as high capital construction costs, shortages in labor, and high labor costs may discourage NF growth. New studies of predictors of State variations are needed.

As previously noted, the considerable growth in home health care and other community-based services during the 1980s may be reducing the demand for NF care (Swan and Benjamin, 1990). The extent that the supply of alternatives varies across States and regions could influence the growth of NFs. Those individuals who need LTC services now have greater choices because of the expanded capacity of community-based providers and expanded public funding for community-based waiver programs. Another factor may be the supply of residential-care beds, which can substitute for NF beds. These residential-care beds are more prevalent in the Western regions of the United States (Harrington et al., 1994). These alternatives may act as direct substitutes for care in conjunction with informal care services. Or perhaps, these alternatives have grown in certain geographical regions in response to the limited availability of NF services in those areas. The relationship of community-based LTC alternatives to the supply and demand of NFs and beds needs to be examined.

More important, there is a need to study the effects of the variation in bed capacity on the access, cost, and quality of NF services for individual nursing home residents and subpopulations of residents or applicants (minorities, Medicaid recipients, and the near-poor). If wide variations in medical practice patterns have negative consequences for some patients, it is also likely that the variations in State NF capacity have measurable negative consequences for some residents or groups of residents.

Footnotes

The research presented in this article was funded by the Health Care Financing Administration (HCFA) and the Department of Housing and Urban Development (HUD) under Cooperative Aggreement Number 18-C-90034. The authors are with the Department of Social and Behavioral Sciences, University of California, San Francisco. The opinions expressed are those of the authors and do not necessarily reflect those of the University of California, HUD, or HCFA.

Reprint Requests: Charlene Harrington, Ph.D., Department of Social and Behavioral Sciences, University of California, San Francisco, Room N631, Box 0612, San Francisco, California 94143-0612.

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