The war over nursing homes is heating up

By Brett Arends

Staffing mandates are just the beginning

There's a good chance that you will end your days in a nursing home. You do not want to spend hours every day lying in your own waste, or fruitlessly ringing a bell for a nurse's aide that never comes. You do not want to be abused, mocked and slapped around by staff either-and this happens, shockingly, far more often than most realize.

The kind of care you get, including the risk of abuse or neglect, is now the subject of a major political battle in Washington, D.C.

Earlier this month the Biden administration announced a new set of regulations that would dramatically raise the number of registered nurses and nurses' aides that homes have to employ, in order to ensure that there are enough on hand at all hours of the day and night.

The nursing home operators hate the idea, as you can imagine. Their trade body just hit back, warning that the new regulations would add about $6.5 billion a year to their costs. They say, or argue, that the regulations would force the closure of many homes, especially in the countryside or thinly-populated areas where it may be harder to operate. They also argue that they can't get enough staff.

I don't write to take sides but to warn you that most of the debate is likely to be misleading, superficial, or worse. I honestly don't understand why a basic understanding of logic seems to have become as rare as an understanding of astrophysics, but it seems to be, and so we all need to arm ourselves.

The more alarmist claims of the nursing home industry should be taken with a fistful of salt. The new federal regulations, as is usual with our federal government, have been designed with a Byzantine complexity that includes all sorts of exemptions and waivers, as well as phase-in periods up to five years. (What would you expect from an organization that came up with the Alternative Minimum Tax?)

The industry's cost estimate is also, notably, about 50% higher than one currently doing the rounds on Wall Street. Take that as you wish. (Usually in this life the higher cost estimate turns out to be more accurate. How often do things cost less than we expect?)

Meanwhile, the staffing mandates are surely as likely to lead to industry consolidation and efficiency gains as they are to cause closures. Executives at medical REIT American Healthcare (AHR) this week cite economies of scale as one reason their nursing home operator, Trilogy Health Services, already meets the staffing standards while remaining profitable. (There are other reasons as well)

The regulations are also designed to meet a real, genuine need. Multiple academic studies have found that nursing homes that have the most staff also tend to have the best patient outcomes. "It's unconscionable that you can have one staff member supporting 40 people in a nursing home.," says Megan O'Reilly, lobbyist for AARP. The organization, she says, "strongly supports" the mandates.

Yet multiple things can be true at the same time, and usually are. And in this case it is possible to agree with all of that and still think there are important questions about the mandates-questions that haven't been answered.

The first is the obvious: Who is going to pay the bill for these mandates? Whether the cost is $4.5 billion or $6.5 billion, the money will have to come from somewhere.

Saying "greedy corporations" is no answer at all. Companies are conduits of money, not pools of it. If the operators cannot raise their prices or slash other costs, some or many will exit the industry.

Prices will surely go up. That's bad news for Medicaid and Medicare, which pays most of the bills. Which means, of course, that it's bad news for us. That money must come from higher taxes, or from cutting spending somewhere else, or both.

The costs also must mean, surely, that the cost of buying private long-term care will also go up.

Operators may also drive down costs by... lowering staff wages. How do you get more staff at lower wages? Simple. Pressure Congress to let in more low-pay workers from other countries.

A nicer way to say this is to talk about "the need for immigration reform in order to expand the supply of caregivers in the United States," as the nursing home operators' trade association puts it on its website.

Meanwhile, here's another issue with the mandates. If they will cost $6.5 billion, that works out at around $5,400 per year for every U.S. nursing home resident.

If I had to go into a nursing home, and I had an extra $5,400 a year to spend to make sure I got better care, and to lower my risks of neglect or abuse, would I spend it all on extra staff? Some, sure. Maybe most. But all?

I'd probably start by spending a few hundred dollars on a device (like an Apple Watch) that would monitor all my vital signs 24/7 and alert the staff if something went wrong. (I mention the Apple Watch simply as an illustration. There are, presumably, professional devices that do more. An Apple Watch costs $400). And each year I'd want better medical monitoring technology, including more artificial intelligence, not less.

The idea that I'd want less technology, and more staff, is nuts.

To deal with abuse, I'd spend money on "granny cams" in my room (and I'd pay someone off site to monitor it). These things start on Amazon for about $20.

No way I'm going into a nursing home without a health monitor and a camera. I'd rather you put me on an iceberg and shoved me out into the Arctic.

I notice many of the studies which show a correlation between higher staffing and better outcomes date back 10, 20, even 30 years-before these technological innovations had taken place. Those studies also raise the possibility that, back then, nursing homes that were better run in many ways also had higher staffing ratios - in other words that they were finding correlation as well as causation.

It's almost impossible to have an intelligent discussion on this (or indeed any) issue these days. I'm sure someone will write in, saying I propose replacing nurses with Apple Watches. You can't make these people up.

Expect nursing home operators to be working Congress behind the scenes. This should be a great season for raising campaign contributions. Many think these mandates may never happen.

We need to improve care in nursing homes, and lower the risks of neglect and abuse. That's an imperative. Our national indifference to elder abuse and neglect is a scandal.

But improving the situation means getting the best possible bang for every buck we spend. That's also an imperative.

And it also means working out who is going to pay for it, instead of the usual suspect: "someone else."

Do you have questions about retirement, Social Security, where to live or how to afford it at all? We want to hear from you. Join the conversation in our Facebook community: Retire Better with MarketWatch.

-Brett Arends

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05-18-24 1043ET

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