Nursing and Personal Care Facilities, NEC

SIC 8059

Industry report:

This classification covers establishments primarily engaged in providing limited nursing and health-related or personal care to individuals who do not need the degree of care and treatment that a skilled or intermediate care facility provides.

Industry Snapshot

Facilities in this category are used mainly by the elderly and, to a much lesser extent, by psychiatric patients and the mentally retarded. These individuals may be healthy or require only a minimum of nursing care, such as the administration of medicine or supervision of self-administered medications prescribed by a physician. These live-in facilities run the gamut from nursing homes and board-and-care facilities to affluent retirement villages. Nursing homes in this category are classified as residential care facilities, but some people are housed in skilled or intermediate nursing homes. Assisted living, congregate care, domiciliary care, and other arrangements also are in this classification.

Residential care facilities represent the second-largest component of health services in this country because of the need to provide care for the growing number of elderly, but the concept of the nursing home is becoming outdated as a place for residential care. Historically, nursing homes were founded on a hospital model of care, which focuses on short-term medical care. Only recently has the paradigm shifted to distinguish aging from illness. Assisted living facilities in the early 2010s focus on a much broader range of living needs over a longer life span.

One of the most significant associations in the industry, the Assisted Living Federation of America, was founded in 1991 as the Assisted Living Facilities Association of America. The nonprofit organization is a trade association devoted to the assisted living industry and the population it serves and comprises more than 6,000 members, including providers of assisted living, state associations of providers, and others interested in promoting awareness, standards, and the interests of the industry. The American College of Health Care Administrators (ACHCA) is a professional society for 6,300 administrators in long-term care, assisted living, and subacute care. The ACHCA's mission to be "the premier organization serving as a catalyst to empower administrators who will define professionalism throughout the continuum of care." The American Health Care Association (AHCA) is a federation of 50 state health organizations and represents nearly 12,000 nonprofit and for-profit assisted living facilities, nursing facilities, and subacute care providers.

Organization and Structure

According to data gathered by the Federal Inter-agency Forum on Age Related Statistics, during the twentieth century, the U.S. population of Americans age 65 and over increased from 3 million to 37 million, and the number of oldest-old (those age 85 and over) increased from 100,000 to 5.3 million. Those numbers were expected to spike in 2030 as the baby boomer generation aged into its retirement years. As a result, the number of Americans 65 years and older was projected to nearly double by 2030 to reach 71.5 million, or nearly 20 percent of the U.S. population. Although growth rates were expected to level off after 2030, increases in the number of oldest-old were expected to continue to rise rapidly between 2030 and 2050 as baby boomers age into this category. The number of the country's oldest-old was projected to grow from 5.3 million to 21 million. Some estimates, which projected lower death rates, placed the estimate even higher.

Traditionally, within this industry residences offered in different settings were distinguished as assisted living facilities, board and care homes, or congregate housing. Assisted living facilities provide help with activities of daily living (ADLs) but offer no or little medical care. Board and care homes, which have been in existence for many years, generally offer the same services to a small group of residents (i.e., two to six) in a converted home. Congregate housing is similar to board and care homes but on a larger scale and traditionally using government subsidized housing. However, as assisted living facilities have grown in popularity, the lines between these definitions of the different facility types have blurred, and most are commonly referred to as assisted living facilities. Assisted living facilities can be free standing or attached to other housing options such as independent living or skilled nursing care. Living choices may range from studio apartments to one-bedroom apartments with or without limited kitchen facilities. Some variations are dictated by state regulations. Twenty-three states require apartment-style units, 40 states permit shared units, and 24 states allow units to be shared by choice of the residents. Some properties may have wings, floors, or units that are specifically dedicated to clients with particular needs, such as Alzheimer's or other forms of dementia.

According to data gathered by the Assisted Living Federation of America, the average age of residents of assisted living facilities in 2009 was 86.9 years, up from 85.3 years in 2006. Women outnumbered men by nearly three to one. The median annual income of residents was $18,972, up from $15,668 in 2006. Three meals a day were part of the basic rate in 91 percent of facilities. Assistance with ADLs was included in the basic rate in 48 percent of facilities, while 52 percent required additional fees for help with ADLs. Almost all facilities offered wellness, social, and recreational activities in the basic rate. ADLs that were commonly offered include help with bathing, dressing, toilet, grooming, cooking/eating, mobility, housekeeping, and transportation. Other services that are likely to be provided include three meals a day, usually provided in a restaurant-like venue; 24-hour supervision; laundry; minor medical supervision like assistance with medication; security and emergency call support; and health, social, and exercise programs. Depending on the accommodations and services and amenities provided, the cost of assisted living housing can range from $800 to over $5,000 a month, and facilities that offer specialized care for dementia-related illnesses also cost more on average. Assisted living is generally less expensive than ongoing home health care and nursing home care.

Background and Development

The number of continuing-care retirement communities' (CCRCs) assisted living facilities in the United States increased in the late twentieth century. In 1994, 526 CCRCs had 68,895 independent living units, 12,369 assisted-living beds, and 20,360 nursing beds.

Despite increasing demands for residential care, fewer people were entering nursing homes. Healthier lifestyles and improved medical technology allowed seniors to recover from strokes, broken hips, and other common occurrences in the aging process so that they did not need to live in a skilled nursing facility.

For that reason, the days of the skilled nursing home as the preferred model of long-term care seemed to be numbered, as nursing homes were either converted to apartment-like facilities providing assisted living or to subacute institutions caring for the seriously ill as part of a managed care network. Because the proposed health reforms in the mid-1990s called for moving health care delivery away from hospitals and into community-based satellite health care facilities, nursing home leaders suggested that homes serve the needs of nonresident seniors in their community as well as residents. Assisted living units built in conjunction with single-family homes and condominiums in a planned unit development or adjacent to a health center, were a newer concept that allowed older persons the opportunity to mingle with their children, relatives, or other young people in a neighborhood.

In the meantime, nursing homes continued to search for revenue and ways to reduce costs, hoping to become integrated into health care networks of hospitals and clinics. Medicaid was the fastest growing state expenditure. At a time when states were in financial distress, many tried to hold down expenses by not issuing permits for the construction of new nursing homes. In 1997 changes in the nation's health care system cut back on Medicaid reimbursement for elder care providers. By the late 1990s, some of the leading providers of care had filed for bankruptcy protection.

Prejudices about the elderly among health care professionals and other staff, as well as attitudes that favored high-tech over low-tech treatment, also interfered with advances in residential care. Worse than prejudices were the repeated instances of neglect among residential facilities caring for the elderly, leading to complaints that the residents are merely being "warehoused." Reports of such instances continued to prompt investigations. Nursing home inspections became more stringent, leading to the discovery of more abuses. In 1996 there were investigations of nursing homes nationwide. Nursing home abuse led states, such as New York, to enact criminal checks on nursing aides and stringent penalties for convicted abusers.

At the beginning of the twenty-first century, growth came from assisted living and low-intensity medical services housing. Residential care was number one on the U.S. Small Business Administration's list of fast growing markets, with most of the growth coming from assisted-living facilities.

In 2006 this industry included an estimated 2,183 nursing and personal care facilities, employing roughly 12,878 people and generating revenues of $351.6 million. Nursing homes (except skilled and intermediate care facilities) comprised another sector within the industry, with 2,737 facilities and 166,125 workers. Personal care home facilities, with health care, numbered 2,539 facilities employing 58,248 workers and revenues of nearly $3.2 billion. There also were 1,586 homes for the mentally retarded included within the nursing and personal care facilities industry sector, employing 33,701 workers and generating revenues of $950.5 million. In addition, there were 1,326 convalescent homes, employing 78,378 workers, as well as 1,870 rest homes that included health care services.

Assisted living experienced "a boom period" during the middle of the first decade of the 2000s, with the strongest level of market demand since the mid-1990s. Consolidation was also on the rise. However, overall industry growth came to a halt in 2008 and remained stagnant during the end of the first decade of the 2000s as a global economic recession took hold and credit disappeared. According to a study conducted by the National Investment Center for the Seniors Housing & Care Industry and the American Seniors Housing Association, construction of properties, including senior apartments, independent living, assisted living, nursing care and continuing care retirement communities, in the nation's top 100 metropolitan markets for the 12 months prior to March 31, 2009, was down 37 percent. Construction was down 45 percent during the 24 months prior to March 31, 2009.

The lack of construction helped to prop up the occupancy rate during the housing market crisis at the end of the first decade of the 2000s. Overall, the occupancy rate for assisted living housing, based on the 2009 Overview of Assisted Living report, was 94.1 in 2009, just 1 percent below 2006 levels. However, based on the American Health Care Association's annual industry survey of the industry's top 50 providers, the overall bed count declined 14,827 from 2008 to 2009. Occupancy rates for facilities that offered dementia-related services stood at 97 percent, suggesting that elderly persons with Alzheimer's or other forms of dementia are difficult to care for at home and these elderly are moving into assisted living. According to the Overview report, rents increased 4 to 5 percent in 2009 to an average of $3,000 a month for a private room and $4,500 a month for a dementia care unit. The cost of assisted living remained well below the cost of nursing home care. According to data from the American Association of Retired Persons, the average cost for one month of care in assisted living was $2,968, whereas the average cost for one month of care for a semi-private and private room in a nursing home was $5,566 and $6,266, respectively.

Although Medicaid did not directly cover room and board for assisted living facilities, residents could apply for waivers to use Medicaid funds to pay for ADL services while residing in an assisted living facility. As a result, the ongoing health care reform debate, including the 11.1 percent cut in Medicaid funds in 2011, was significant for the assisted living industry.

Current Conditions

In 2011 the National Center for Assisted Living reported 31,100 assisted living facilities with 971,900 beds and 733,400 residents. The facilities ranged in size from a few residents to more than 300, but most housed between 25 and 120 residents. The average cost of residing in an assisted living facility had risen to $3,477 a month, up 5.6 percent from 2010. Alaska had the highest average monthly rate, at $5,500, followed by Massachusetts ($4,950), Delaware ($4,626), Maine ($4,625), and Connecticut ($4,488). The states with the lowest rates were Georgia, Missouri, and North Dakota. Although construction of facilities continued to decline into the early 2010s, occupancy rates were on the rise. According to the National Investment Center, the average occupancy rate for senior housing was 88.4 percent in the first quarter of 2012.

Industry Leaders

According toAssisted Living Executive, the largest chain of assisted living facilities in the United States in 2011 was Emeritus Senior Living in Seattle, Washington, with a capacity of 46,777 residents. The firm expanded when it purchased 144 properties from Sunwest Management, which had previously had a capacity of more than 16,000. Second was Sunrise Senior Living (Virginia), with a resident capacity of 28,131, followed by Brookdale Senior Living (Tennessee) with 27,658; Atria Senior Living (Kentucky) with 11,168; and Five Star Senior Living (Massachusetts) with 10,489. Rounding out the top 10 were Merrill Gardens, One Eighty Leisure Care, HCR ManorCare, Life Care Services LLC, and Integral Senior Living.

Workforce

In 2009 this industry employed approximately 439,250 workers. Personnel at residential care facilities vary according to the number of residents and services provided. Staff may be employed by the facility or in cooperation with an outside agency. In nursing and convalescent homes, there is a manager or administrator, as well as personal care attendants on staff who assist residents with personal needs, such as feeding, dressing, and bathing; nurses who assist residents with education and the administration and supervision of medication; physical therapists; activities coordinators; food service managers; and maintenance staff. Many states require the administrator or manager of nursing homes to complete a state-approved certification program within one year of being hired and require them to take continuing education courses annually from a state board of nursing, social work, or other such agency.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

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