Operating a nursing home entails the duty of caring for residents by providing clinical assistance and documenting that care using long term care software. But beyond these basic tasks, leaders in long term care must strive to provide a high quality of life by creating a comfortable, home-like environment, and organized social activities, thus demonstrating a genuine concern for the everyday well-being of residents.The practices for running a long term care facility are highly regulated on both state and federal levels. Therefore, facilities must employ and retain knowledgeable staff who understand the intricacies of providing excellent resident care while complying with government-enforced standards. Financially, though, there are a different set of concerns that impact the daily operations of a nursing home business, consequently affecting the profitability of a long term care facility. In particular, non-profit organizations may find it difficult to balance the books. KJ Page, the executive director of Chaparral House, recently described conducting “different types of caregiving work with the same bucket of money but without the support from a corporate office.” She explained how she manages “pulling one cent from here, two cents from there” while still “managing pretty well.” You can listen to her interview on the LTC Heroes podcast below:It is difficult to pinpoint just how much do nursing homes make because the overall profits are only known only to the facility owners. However, between 2004 to 2020, the cost for long term care services increased significantly from 1.88% – 3.80% per year. Meanwhile, a private room in a long term care facility is now $2,542 more expensive per year. The increased rates charged in long term care facilities are outpacing the U.S. inflation rate of 1.8%, according to the United States Department of Labor Bureau Statistics. Therefore, one can assume that the nursing home business is, at the very least, a lucrative business for facility owners. Contact us here if you would like to test drive our user-friendly software.Here one may ask if the nursing home business is lucrative. If so, how much do nursing homes make? Research shows that facilities with high Medicaid occupancy rates typically have lower professional standards, lower quality of care, and lower profit margins. This can be seen in Pennsylvania, where, between 2007 to 2014, the total profit margins for for-profit, skilled nursing facilities decreased by twenty-eight percent. Data gathered by Avalere Health shows there is a higher correlation between Medicaid occupancy rates and lower profit margins. Research also demonstrates that while nonprofit facilities prioritize their resident’s and staff’s general well-being more, they invariably have fewer complaints and provide a higher quality of care. Meanwhile, for-profit, investor-owned facilities are more likely to have poorer resident outcomes due to fewer resources and reduced budgets. Instead, the money is funneled into personal profits and covering corporate overheads, all of which make for lower quality of care, negatively impacting the nursing home profit margin.
How Much Do Nursing Homes Make?An aging American population has begun to impact the level of care in long term care facilities; nursing homes must learn to expand both their services and parameters in line with an increased demand. Approximately seven out of ten people aged 65 or older will require long term care at some point, making the cost of long term care a growing concern for the government and the families of elders.