A recent study compared the long-term care industry in California, Ontario, Canada, England, and Norway as to the extent to which ownership of nursing facilities has shifted from the public sector to private for-profit and not-for-profit companies, and how this shift affects the transparency of information and accountability for public reimbursement.
The international study found that increases in the percentage of private companies correlated with lower spending on nursing and direct care services. While less was spent on direct care services in private facilities, profit margins in private facilities were much higher than in their public counterparts.
According to the study summary by The Center for Medicare Advocacy, the study found:
“a striking aspect of the study is its description of the nursing home industry in each of the four locations. The contrast between California (2012) (with 99% of facilities privately-owned, including 69% on a for-profit basis and 51% owned by chains) and Norway (2013) (with 90% facilities municipally-owned) is stark.”
- In California, 35% of nursing home expenditures are devoted to direct care, in Norway, 60%.
- California nursing facilities spend, on average, 15.5% of their revenues on administrative costs, in Norway, 3.3%.
- Profit margins in 2011 were 6.5% in California, with chains enjoying profit levels that were double other facilities, and total profit margins increasing 42% over the study period, 2007-2012; in Norway, municipal facilities (90% of the facilities) do not have profits.
You an read a review of the study by The Center for Medicare Advocacy at the below link.