Assessing contributors to cost of care in nursing homes

In 1994 12.7% of the population was 65 and over, while 10.6% were 85 and over. Expenditures for nursing homes reached $72.3 billion in 1994 (much of which is tax-supported) accounting for 8.7% of all personal health money spent. Data from the 1993 Missouri Medicaid cost reports for 403 nursing homes were reviewed to determine differences in costs per resident day (PRD) and discover which factors most influenced these differences. Mid-sized facilities with 60-120 beds reported the lowest resident-related PRD costs. PRD expenses for aides and orderlies were higher in tax-exempt facilities, which was thought to be related to their "more altruistic" mission. Investor-owned facilities showed significantly greater administrative costs PRD, which may relate to higher administrative salaries and fancier offices. The authors suggest further study that would incorporate location, occupancy rate, quality of care, case mix, and payer mix data.