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Medical Ethics

The Jeopardy of Justice in Long-Term Care
October 17, 2011

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Case One

An 82-year-old physician is admitted to a skilled nursing facility following a 30-day hospitalization for trauma resulting from a fall from a ladder outside his home. Hospitalization was complicated by deep venous thrombosis, catheter-associated urinary tract infection, nosocomial pneumonia with respiratory failure requiring mechanical ventilation, Clostridium difficile diarrhea, and paraplegia resulting from an occult thoracic vertebral fracture that was diagnosed late in his hospital course, requiring emergency spinal surgery.

The nursing facility is a new and beautiful 40-bed facility that provides only short-term, postacute skilled care. Every room is private, with a bathroom and shower. Fine dining is provided.

He receives physical and occupational therapy with some improvement in his mobility over many weeks. He remains paraplegic however, and after 3 months in the facility his function plateaus. He is informed that he no longer qualifies for skilled care. Discharge home is planned, but he lives alone in a two-story home and cannot meet his own care needs. He wishes to remain in the facility for the long term but is told that he must leave when his skilled care days run out.

Case Two

A 78-year-old Medicaid recipient with Alzheimer’s disease lives at home with his wife, who herself is partially disabled by congestive heart failure, degenerative joint disease, and diabetes. They have no children. After he wanders away from home at night several times, his wife seeks nursing home placement for her husband, with the assistance of a county social worker. Of 19 nursing facilities within 30 miles from her home, none is willing or able to accept him for admission.


The population is aging. However, the number of nursing facility beds nationwide is not increasing. There will not be enough nursing facility beds for those who need them. In many states, there is a shortage of nursing home beds now, so many, if not most, facilities pick and choose who they accept for admission today.

Who they choose is often determined by money. An emerging trend is the development of facilities, such as that described in Case One, that limit their services to short-term postacute care, primarily for Medicare beneficiaries, in order to maximize revenue per patient. Another ongoing trend is the exclusion of Medicaid beneficiaries requiring long-term care from nursing homes (such as the patient in Case Two) because of inadequate reimbursement by Medicaid for their care.

These cases illustrate some of the ways that nursing homes and nursing home care are changing. These trends coincide exactly with changes occurring in hospitals over the past 2 decades. Changes in health care delivery are entirely responsive to changes in reimbursement. In short, hospitals and nursing facilities alike have chased after money.

All hospitals have sought to attract patients for elective surgery and other lucrative procedures, while specialty hospitals have successfully avoided other patients altogether, from whom they would make less money. Now the specialty hospital model of restricting care to patients with certain problems has made it to nursing facilities as well. The nursing home as we know it, providing lifelong care to frail elderly persons and others with long-term disabilities, is ceasing to be. Even the term "nursing home" has become undesirable to consumer groups and providers alike. What were once nursing homes are now "rehab centers." The death of nursing homes might not necessarily be a cause for lament, were it not for the fact that little exists to fill the void.

The History of Nursing Homes

Nursing homes in the United States arose from many different sources centuries ago. Historically, many facilities grew out of the remnants of a system of municipal and charitable "poor farms" in the 1800s. The need for nursing home care increased following the American Civil War so the large number of disabled soldiers could receive care.

Many other facilities emerged in the early 1900s from former tuberculosis sanitoria. In general, their existence was a reflection of a community ethos of the time, which was an obligation of communities, supported by charities and local governments, to care for frail elderly people who could not be cared for by family at home. This was based on the principle of beneficence, along with other shared values such as respect for and obligation to one’s elders.


The creation of Medicaid in the 1960s as part of President Johnson’s Great Society assured a funding source from federal and state governments for nursing home care. While Medicaid can generally be thought of as health insurance for the poor, with the costs of long-term nursing home care and the hospital care leading to it climbing so high, many people who weren’t poor soon become so when their health declines. Medicaid has become, in effect, long-term care insurance for the middle class.

Originally, Medicaid was, from the perspective of nursing home operators, a desirable reimbursement source. The program became undesirable only when the amount of money paid became inadequate. Medicaid reimbursement in many states is now too low to cover even operating costs for nursing home care. And reimbursement from the program is being cut further in most places, making placement even more difficult for Medicaid beneficiaries seeking nursing home care.

In order to limit spending, states have made eligibility for Medicaid more difficult, limited nursing home beds by restricting licensure, and reduced reimbursement rates. As the number of frail elderly has increased, care has shifted to other settings including assisted living and home care, with much less oversight by federal and state regulators, and has resulted in a shift in the burden of payment from government to private sources. The burden of care is likewise shifting to lower-skilled and lower-paid workers and to family members.


Over the past 2 decades, Medicare’s prospective payment system for hospitals has created a perverse financial incentive for hospitals: to discharge patients who are still sick and still dependent upon others for care. Actually doing so would have been impossible, however, were it not for the willingness of others (that is, nursing homes) to admit these patients for skilled care.

Medicare reimbursement for posthospital skilled care is several times that for long-term custodial care, even for private-pay patients. Such a financial incentive has fundamentally changed the nursing home environment, so that now the majority of facility admissions nationwide are for skilled care.

The economics are such that even many community-owned nursing homes have changed their mission from meeting the long-term care needs of the populations around them to chasing Medicare dollars for posthospital care. Because the overall number of beds is limited, increasing access for posthospital skilled care means reducing access for traditional nursing home care.

Changes in Medicare and Medicaid reimbursement by federal and state governments were made to reduce overall expenditures that resulted primarily from an increase in the number of beneficiaries. Decreased tax revenues during a period of prolonged economic turmoil have served to sharpen the axe for recent and future cuts.

Ethical Implications

As a society, and as individual health care practitioners, we have a moral and ethical obligation to care for others and to do good. Businesses are not expected to share in that moral code. In the U.S. economic system, it is unreasonable to expect that the mission of meeting all of the care needs of society can or should be met by health care businesses, without adequate payment.

The reality is that the mission of health care businesses changes with changing reimbursement. The moral and ethical values of a society, however, should be enduring, as they form the basis of civil society itself. The ethical principle of justice demands fair allocation of scarce resources and fair access to care.

Current political debates about deficit reduction, taxation, spending, and the role of government in health care appear to deal only with resource allocation. But these questions have a moral undertone: Must we be our brother’s keeper?

Increasingly, many Americans say "no." Inadequate Medicaid reimbursement for nursing home care ultimately means inadequate care or no care. Without alternatives for care provision elsewhere, the inescapable result will be neglect. Whom shall we blame for that?

At some point, the unwillingness of society to provide for adequate long-term care of the frail, destitute, disabled, and infirm represents societal neglect. We have only ourselves to blame. Despite current economic conditions, we remain the wealthiest nation on earth. Can we not afford to take care of the frailest and neediest among us, particularly knowing that some day we will be them?CfA

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Helen McGaw

Tuesday, 11/08/11 14:59

Kudos! As a seasoned Director of Nursing I have resigned from high paying positions in prestigious facilities when told the "sub-acute" or "transitional care" units were to be upstaffed despite acuity measures or care needs. Your recap of the history of nursing homes was extremely acurate. We found the Medicare directed 75% rule for acute rehab contributed to a flury of new beds in facilities where the staff was not adequately not trained nor the physical plant appropriate for the sub acute rehab patient. I recall one facility managed by one of the larger corporations opened a sub acute rehab unit complete will a gala event, ribbon cutting, community politicians, easily a $50K event. This facility did not have even one handicapped accessable bathroom. Even the doors to the therapy gym were not accessable. Justice or greed?


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