An examination of 2019 Medicare cost reports finds that nursing facilities spent more of their revenue on administration, capital, other, and profits (34%) than on nursing (27%). “United States’ Nursing Home Finances: Spending, Profitability, and Capital Structure” also finds that although nearly half of facilities reported a net loss, 79% actually had a profit when Medicare disallowances and depreciation were excluded. More than three-quarters of facilities reported $11 billion in payments to related party organizations, reflecting 9.54% of their net revenue. The study’s authors recommend the adoption of policy options to “improve rate setting, reimbursement methods, the accuracy and the transparency of costs reports, including related-party transactions, and the accountability for spending government funds.”
January 11, 2024 – T. Edelman