Study: Residents are Wealthier, Happier at Nonprofit Nursing Homes

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July 5, 2011; Source: Chicago Tribune | Residents of Winchester House, a government-run nursing facility in Lake County, Ill., are nervous about what may happen to the place they call home. Officials are looking at privatizing the operations. For residents, that may mean new caregiving staff and a new modern facility.

Company operations are funded mostly by Medicaid, with some support from a local tax levy. Medicaid payments have remained flat with tax money being used to cover the shortfall. Leaders want to turn management over to a private company or nonprofit before the tax money is gone. They would like to make the operation change by the end of this year.

Changing management will likely mean the unionized staff will see pay cuts and reduced benefits to streamline expenses. Officials are also discussing replacing the costly, out-dated building with a modern facility for $36 million.

A recent study on privatization of nursing homes concluded that when a government-run home is taken over by a for-profit company, violations of quality care tend to increase. When a nonprofit assumes control, violations don’t increase, but fewer Medicaid patients are admitted. Anne Amirkhanyan, who conducted the study, notes, “It’s different priorities. There are wealthier, happier clients at nonprofits. For- profit companies have residents who are quite poor, but they don’t have the (care-oriented) mission.”

Lake County officials are confident that a high level of care will be continued. They plan to write contracts that include quality inspections and customer satisfaction surveys. New management would also be required to reserve space for Medicaid patients.

An Illinois economist who studies health care issues believes the privatization of county facilities will continue. States are trying to reduce their health spending, so local governments are being asked to absorb escalating nursing home care bills, or get out of the business.

Residents of Winchester House can only wait and see what happens.—Nancy Knoche