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Nursing homes are adding new services to compete with other long-term care providers

The nursing home market has become more competitive in recent years, a trend that will continue. The competition is coming not only from other nursing homes but from home care and assisted living facilities. In response to this competition, nursing homes are no longer providing only long-stay institutional care. They are branching out into other segments of the long-term care (LTC) market—such as assisted living, home care, and adult day care and contracting with managed care organizations for the subacute care patients—according to New York State nursing home administrators, who responded to a 1999 mailed survey.

Subacute care is becoming an important line of business for free-standing nursing homes as they struggle to compete with hospital-based and rehabilitation facilities for these types of patients, although this is more common in for-profit facilities than nonprofit facilities note William D. Spector, Ph.D., of the Agency for Healthcare Research and Quality, and Dana B. Mukamel, Ph.D., of the University of Rochester.

Administrators said they were more likely to diversify into lower levels of long-term care (adult day care, assisted living, or home care) than add new nursing home beds or purchase another nursing home. Nonprofit facilities were much more likely to offer lower levels of care than for-profit facilities.

This diversification complicates the nursing homes' ability to meet consumer preferences, however. Administrators thought that managed care organizations (MCOs) and hospitals view price and range of subacute care services as very important whereas individual purchasers view quality of life and location as more important. The authors caution that if facilities provide services both to the traditional long-term care resident and to subacute care patients in a highly competitive environment it may be difficult to accommodate the price demands of the MCOs and hospitals and meet the quality of life concerns of the long-stay residents.

See "Nursing home administrators' perceptions of competition and strategic responses," by Drs. Spector and Mukamel, in the February 2001 Long Term Care Interface, pp. 37-41.

Reprints (AHRQ Publication No. 01-R055) are available from the AHRQ Publications Clearinghouse.

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