Skilled Nursing Explained


Michael Gill

There is often confusion about the term Nursing Home because it is frequently used generically as an all-encompassing term for senior living. But in today’s senior living market, Skilled Nursing Homes have a specific market niche. What follows is an explanation of when you want to consider a Skilled Nursing Facility and what distinguishes them from the Assisted Living industry.

When You Need Skilled Nursing

Specifically, you go to a Skilled Nursing Home if you are indigent and need long-term care paid for by Medicaid; if you need post-hospitalization rehabilitation services paid for by Medicare; or when you have complex medical needs that you can pay for privately. Some historical background is helpful.

Historical Context

Nursing homes are an outgrowth of hospitals, which themselves developed out of the needs of the two world wars as the medical fields evolved and grew. Hospitals needed a place to keep patients who had long-term needs, so nursing homes, then also called convalescent homes, were built. Once the soldiers went home, nursing homes evolved to care for the elderly, particularly starting in the 1950s. In the 1960s the government started paying for nursing home care through Medicare and Medicaid. In this major reorganization of the healthcare system, nursing homes came under the purview of increasing government regulation, and are today regulated by the Centers for Medicare and Medicaid Services. In the 1980s the Assisted Living industry developed, recognizing the fact many of the nursing home residents didn’t need attention from skilled professionals like nurses, but rather just needed help from caregivers with their Activities of Daily Living.

The seven Activities of Daily Living are:

  • dressing
  • bathing
  • feeding
  • transferring
  • toileting
  • incontinence
  • medication management

Activities of Daily Living are non-skilled services performed by caregivers. Skilled services are performed by nurses and physical therapists. Nursing Homes were re-branded as Skilled Nursing Homes in the 1990s in recognition of the skilled services they provide.

Critical Difference

So here is the critical difference everyone needs to understand: Skilled Nursing Homes were developed for when someone has Medical Necessity. Assisted living is where you go when you need Custodial Care. Medical Necessity is paid for about three-quarters of the time by the government while Custodial Care is paid for privately.

Who goes to a Skilled Nursing Home?

About 58 percent of beds in a Skilled Nursing Home are Medicaid residents. They are there because they meet the two criteria.

  • The first is financial, and an individual can have no more than $2,385 of monthly income and no more than $2,000 of assets.
  • Second, a Medicaid resident must have medical necessity, and over 80 percent of the time I would estimate that means dementia. Medicaid rules are a complicated topic, which we will address in another post.

The next group of Skilled Nursing residents, about 15% of the total, are elderly patients coming off a three-night stay in a hospital, most commonly for something like a broken hip, a urinary tract infection, pneumonia, or the like. They qualify for about three weeks of in-patient services by physical therapists, occupational therapists, and speech therapists. This is paid for by Medicare, which is trying to build a patient’s strength back up before they go home so that the patient doesn’t fall or have a reason to go back to the hospital. It is cheaper for Medicare to pay for rehab than it is to have another hospital re-admission.

The final group of Skilled Nursing Residents are those who pay privately for care. This group may have complex medical needs, such as a feeding tube, a tracheotomy, an IV drip, or some other chronic need that requires continuing medical care. Because this category of patient has exceeded Medicare’s coverage limits, and because this category of patient doesn’t qualify for Medicaid, they must pay privately.

Why Assisted Living is Preferred

I see many Nursing Home residents who are paying privately for care but who could also be cared for much better and cheaper in an Assisted Living. A shared room in a Skilled Nursing costs upward of about $5,600 per month, and private room costs run $9,000 per month and up. This is 50% to 100% more expensive than an Assisted Living or Personal Care Home. Furthermore the care in Skilled Nursing is often of far lower quality as in Assisted Living or Memory Care. This is because there is a far more favorable ratio of caregivers to residents in an Assisted Living setting, and the environment is better tailored to the residents’ social needs. Skilled Nursing Homes usually have about a 15:1 ratio of caregivers during the day, and 25:1 ratio during the night. Assisted Living and Memory Care can have twice as many caregivers.

So when I meet clients who say to me “my mother needs Skilled Nursing,” we always have to go through the potential resident’s care needs and financial resources to make certain we are finding them the very best option for their unique situation. Most often—but not always—Assisted Living or Memory Care is a much better option compared to a Skilled Nursing Facility.

In Conclusion

I hope this introduction to the Skilled Nursing Home has been helpful. My name is Michael Gill of Texas Senior Living Locators, and if you need help finding an appropriate solution in assisted living, memory care or independent retirement living in the Austin area, please give me a call at (512) 630-7133.

This information is also available in a video on our YouTube Channel.

Skilled Nursing Explained

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