Nursing Home Cartel: Price Increases, While Quality Decreases

Recently, I was wondering why nursing homes are so expensive. The cost of nursing homes according to this article have increased 7.5% per year (much greater than inflation yet I really don’t believe the quality of nursing homes has improved). Today, many nursing home or assisted living facilities can run over $80,000 per year. People can purchase what is known as long-term care insurance to cover the cost however some insurance companies have got out of the business of writing policies.  I thought about the Peter Law which states that: over time if prices rise and quality suffers look to government intervention as the culprit.

Assisted living facilities and nursing homes cost so much money because of the burdensome regulations that they face. The regulations increase prices because the nursing homes have to comply with them and have less money on other resources. Also have you noticed how so few nursing homes there are given the large aging population? What does not really make any sense is that United States has fewer nursing homes in 2010 (15,622) then in 1995 (16,700) even though the elderly population has greatly increased. What is even more interesting is that from 1985-1995 the number of nursing homes decreased 13%. Part of the reason why there are fewer nursing homes then there otherwise would be is why would anyone want to start a nursing home business when they have to comply with the burdensome regulations? 

A skilled nursing facility has to be certified in order to collect money from either Medicare while a nursing facility is a nursing home that will be reimbursed by Medicaid. In order to get reimbursed the nursing facilities have to jump through numerous hoops in order to get certified and meet certain requirements like having a licensed nurse practical nurse on duty 24 hours per day. A registered nurse is also need for a certain amount of time per week.. For instance Texas has their own book for the regulations regarding nursing homes here. Some examples of this are requirements for residents to have phones, for administering drugs an unlicensed person can administer drugs but a unlicensed person is limited to only a few type of people. Some of the regulations get really bizarre like 

"Deviations from normal food and fluid must be recorded in the clinical records". Snacks must also be documented using the "point percentage, or other system consistently facility-wide". I am not quite sure what this even means. There must also be "no more than 14 hours between a substantial evening meal and breakfast the following day". Why all these regulations when nursing homes are perfectly capable of writing their own rules to ensure patients are comfortable and safe to get the best possible care is beyond me. Nearly every state goes beyond federal regulations as seen here. Other states have their own quirks like Rhode Island which requires that a nursing home facility have a person around the clock who is certified in Basic Life Support. Kansas requires that staff wear ID badges that are labeled with a name and position. In New Mexico personnel must be briefed on what type of condition and care is needed for each resident. In many states there are rules not allowing nurses to do any type of laundry or housecleaning which essentially sounds like a union. 

All of these regulations are greatly increasing the cost of nursing homes which by definition decreases the number of elderly people that can use them. People should want nursing homes popping up on every corner like Wal-Mart, McDonalds, or Starbucks. Without these regulations nursing homes would have to compete on quality, price, and services. Creating more barriers to entry in an industry reduces who can enter which increases the price and reduces quality especially if you have to comply with state and national regulations. Politicians claim they are about the elderly.If a politician gave a speech and claimed they "cared" about the elderly I would walk up to them after their speech and ask if they cared so much about the elderly what is my grandmother's name?