Public Policy and the Nursing Home Industry

Abstract

The nursing home industry is a multibillion dollar business in the United States, characterized by rapid growth in profits and large chain-owned corporations. The industry, while private in nature, is effectively a public program defined by public policies, particularly by the Medicaid program. Demand for services is artificially inflated because of the absence of community-based alternatives and favorable nursing home reimbursement policies. The effectiveness of regulatory activities in protecting consumers is questionable, where poor quality is commonly found. Although the structure of the nursing home industry requires radical change, the politics and economics of the current situation reinforce continued expansion of the industry and the use of institutionalization as the primary modality of treatment for the frail aged.