What are nursing facility occupancy rates and why should we care about them? These rates specify the percentage of beds filled at nursing facilities. Low occupancy rates lead to fiscal challenges for nursing facilities and can ultimately lead to budget cuts and the shuttering of programs important for the quality of their nursing home care, which impacts residents’ mental health. On the other hand, high occupancy rates can lead to more challenges in handling the future demand for nursing homes.
Recent Data from California Nursing Facilities
Occupancy rates were calculated using California nursing homes’ average number of patients per day and their number of certified beds. Nursing homes with less beds have a higher occupancy rate. Nursing homes with larger capacity, specifically those with more than a hundred beds, fall below the state-wide average occupancy rate.
The following map shows average occupancy rates in California, categorized by county. Most counties seem to have occupancy rates that lie between 28-84%. Surprisingly, there are counties with occupancy rates higher than 100%. This indicates that those counties have enough nursing homes with more patients per day on average than certified beds to be able to increase their average occupancy rate to such a high degree.
Figure 3: California Nursing Home Occupancy Rates by County
Personal Complications for Families
Some families are able to anticipate the need for nursing facility care for their loved ones. They may be lucky enough to have the time to plan for the financial cost of nursing facilities and choose the best one for them. Others might not have that luxury, either due to living in a remote area or to unfortunate events that may cause an immediate need for such care. If there are not enough beds available for more residents, these people are forced to wait for care when they cannot afford it.
How Low Occupancy Rates Hurt Nursing Facilities and their Residents
Many Medicaid programs calculate per diem rates for nursing facilities based on costs for operation, services, capital, and occupancy rates. They take a facility’s total cost and divide it by either the facility’s occupancy level or occupancy standard, and Medicaid will pay the lower of the two. Occupancy standards are minimum thresholds sometimes calculated as the average state occupancy rate. If a state contains a few nursing facilities with high occupancy rates, this could leave the rest of their facilities at a financial disadvantage and cause facilities to shut down important senior companion programs, cut staff, and ultimately provide lower quality care. Capital costs can be calculated based on Fair Rental Value, an assessment of a facility’s market value based on how many certified beds they own. To help prevent overbedding, a few states have programs that offer better per diem rates to nursing homes if they buy beds from other facilities to then retire them immediately after.
Future Demand for Nursing Homes
Occupancy rates have been declining for the past five decades with the help of staff shortages, COVID-19, and people choosing HCBS instead of nursing facilities. Although facilities may be currently burdened with low occupancy rates, the Public Policy Institute of California (PPIC) says that California’s senior population will grow 87% by 2030. According to the PPIC, all of California will exceed its current capacity by this year. If this prediction is accurate, policymakers will need to find ways to increase nursing home capacity.
By Beatrice Ling