SIC 8051 Skilled Nursing Care Facilities

Encyclopedia of American Industries | 2005 | Copyright

SIC 8051
SKILLED NURSING CARE FACILITIES

This industry contains establishments primarily engaged in providing inpatient nursing and rehabilitative services to patients who require continuous health care but not hospital services. Care must be ordered by and under the direction of a physician. The staff must include a licensed nurse on duty continuously with a minimum of one full-time registered nurse on duty during each day shift. Included are establishments certified to deliver skilled nursing care under Medicare and Medicaid programs. Skilled care facilities include the following: convalescent homes with continuous nursing care, extended care facilities, mental retardation hospitals, and skilled nursing homes.

NAICS Code(s)

623311 (Continuing Care Retirement Communities)

623210 (Residential Mental Retardation Facilities)

623110 (Nursing Care Facilities)

Industry Snapshot

According to the Centers for Medicare and Medicaid Services (previously known as the Health Care Financing Administration), U.S. citizens spent $92.2 billion on nursing home care in 2001.

Skilled nursing care facilities serve the nation's fastest growing population segment—those 65 years and older. An estimated 1.5 million people resided in nursing facilities in 2000. The most common reason the elderly enter a residential facility is circulatory problems (22 percent). Injuries and respiratory diseases account for 14 percent and 11 percent of admissions, respectively. In 2001, 13 percent of the U.S. population was over 65, a number that was expected to increase to 20 percent by 2020. An estimated 5.8 percent of all persons aged 65 and over resided in nursing homes in 1999. This number is also expected to increase, reaching approximately 8.4 percent, or 6.6 million people, by 2050.

In 2000, at the age of 65, men were expected to live an additional 16.3 years; women, an additional 19.2 years. Life expectancy was projected to continue to rise, with life expectancy at age 65 reaching 17 years and 20 years for men and women, respectively, by 2020. In other words by 2020, a 65-year-old man could be expected to live to the age of 82 and a woman could be expected to live to the age of 85. For those over the age of 65, there is a 41 percent chance that they will spend an average of 2.5 years in a skilled nursing facility. A one-year stay in a nursing home can cost between $30,000 and $80,000.

Longer life spans, coupled with the trend toward smaller families with fewer children to share responsibilities for the aged, will mean a greater need for medical health companies. As a result, the nursing home and long-term care industry will continue to grow, but it is unlikely that it will be able to keep pace with the growing demand for quality skilled nursing care. Funding will also be a dilemma as reduced or stagnated government spending is a widespread concern.

Essentially, these figures sketch the scope and populations served by the skilled care nursing industry. Over the course of the past decade, innovative reallocation of resources has expanded options for long-term care, but few, however, match the optimum level of skilled nursing care provided for populations with chronic and multiple disablement. Skilled nursing care, similar to custodial or convalescent care conceptually, represents a long-term vehicle for meeting the comprehensive medical, personal, and social service needs of chronically disabled persons.

Skilled nursing care services differ in terms of the levels of services provided, patient admission criteria, staffing, and reimbursement mechanisms. Each aspect of the skilled nursing care environment reflects the high level of intensive care. All skilled care facilities provide continuous 24-hour care that is prescribed, directed, and executed under the supervision of a medical doctor. Professional performance and supervision by licensed personnel also apply to the provision of ancillary services such as physical therapy and other such prescribed services.

One of the trends affecting health care is integration or integrated delivery systems—a system that tracks patients over time and spans all levels of care and fosters alliances among the various care givers. Nursing home regulations, the need for new managers, standards, and managed care contracts are among some of the challenges facing the industry.

Organization and Structure

Skilled nursing care facilities primarily operate under three categories of ownership: for-profit, nonprofit, and government. For-profit skilled care nursing encompasses tax-paying structures operating under proprietary or investor/shareholder ownership by licensed administrators or as a subsidiary of a corporation. Nonprofit ownership includes non-secular, church-related nonprofit organizations and secular, fraternal or other membership group, ownership. Government, or public ownership, includes establishments operated by city, state, or federal governments.

In 1999 and 2000, 67 percent of nursing home facilities were for-profit; 26 percent, nonprofit; and 7 percent, government-owned. Fifty-five percent were owned by a multifacility chain, and the remainder was under single ownership. Nearly 80 percent of all facilities were dually certified for Medicaid and Medicare, with 7 percent Medicare-only certified and 13 percent Medicaid-only certified.

In the mid-1990s, nonprofit nursing homes, which were either self-financed via retained earnings or through tax-exempt debt, began facing a bigger challenge from the for-profit sector. For-profit organizations could raise funds through stock offerings and retain managers through stock option plans. The non-profit sector was challenged to manage as efficiently and effectively as the for-profit group. Seventy-three percent of nursing homes were investor-owned in the early 1990s. Although the nonprofit sector was relatively stable, larger companies continued to acquire smaller long-term care facilities.

At the same time, there were 296 associations concerned with nursing homes and 59 associations devoted to nursing home administration. The Association of Health Facility Survey Agencies was concerned with facility licensing and certification programs. The...

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