Controlling Growth of Medicaid Beds Saves Money, Improves Care

The 85th session of the Texas Legislature promises to bring lawmakers plenty of complicated problems with huge price tags. Improving the quality of care in Texas nursing homes isn't one of them. That's because the quickest, easiest way to improve nursing home care in Texas won't cost taxpayers a penny. In fact, it will even save money.
During the 2017 legislative session, lawmakers will be asked to strengthen the state's Medicaid bed allocation, limiting the growth of Medicaid beds in Texas nursing homes.
As many as 30 percent of the Medicaid beds in Texas long-term care facilities are empty. When a long-term care facility cannot fill its beds, fixed costs must still be met. That leaves facility operators cutting costs and stretching their available assets just to get by. Lawmakers will be asked to stop adding Medicaid beds until a process can be developed which allows occupancy rates to serve as the basis for adding more.
The approach is needed because the nursing home business is not driven by market forces. As many as 80 percent of residents rely on Medicaid and Medicare. According to the National Conference of State Legislatures, 35 states currently maintain a process to manage health facility growth.
The state's existing bed allocation policies were initially developed to improve resident care by limiting the allocation of Medicaid beds, prompting competition and controlling Medicaid costs. But over the years, those rules have been riddled with exemptions. The result is an oversupply of unused beds, creating health care price inflation and reducing facilities' ability to improve their infrastructure and invest in their staff. That puts increased stress on understaffed caregivers
and contributes to one of the highest staff turnover rates in the country, reducing the quality of patient care.
Wisely planning how these beds are distributed reduces overall facility costs and lowers the cost of care. In short, higher occupancy rates and lower per-resident costs result in better care.