It’s all about the money.

Well, it’s the Fiscal Times, but it’s a start. Maybe it’s the best place to start because the fiscal ramifications of nursing home laws are the driving factors in many forms of nursing home abuse and neglect. The article stops short of directly tying the recent efforts to gut Medicaid and Medicare to the increasingly common spectre of nursing home abuse and neglect that grace this blog among many others.

There’s some shocking honesty in the quotes from nursing home executives and financiers. Edward Steinfeldt, described as a “consultant to developers of retirement housing and health care” says quite plainly what’s written on the t-shirt the elephant in the room is wearing: it’s all about the money.

“I cannot tell you of anyone who has actually developed a new skilled nursing facility in at least the last five years in California… Why would you go into a business that can’t cover its costs?”

Why, indeed? This simple question reveals the dilemma we are facing. Nursing homes have traditionally been a lucrative business. Because the majority of people in nursing homes were being paid for by the state and federal governments, the money was good and reliable.

For-profit nursing homes made a tremendous amount of money while still adhering to the regulations and laws that applied to the homes. When they failed to do so, they were assigned modest fines. When their lapses result in death or injury, families were compensated or filed lawsuits.

What has changed? Medicaid funds have been under assault from states and the federal government. Reimbursement rates are dropping. With less money to be made, investors will have less incentive to build and own nursing homes.

The typical supply and demand model doesn’t work in this situation. Regardless of the supply, Medicare will remain the same. If the profit margins to run a for-profit nursing home aren’t tempting, investors will find somewhere else to put their money.

There are no easy answers to the nursing home shortage, but that’s not going to keep it from coming.