Now that the government was so involved in the provision of nursing home care, it was determined that a national survey of the facilities was needed to identify how many there were and other basic characteristics of the facilities. The names given to these surveys varied, but most of the early ones were called “Master Facility Inventory Surveys“. One of the problems designers of the surveys had was in defining what constituted a “nursing home”. They settled on four classifications: nursing care homes, personal care with nursing homes, personal care homes, and domiciliary homes, and decided to count all facilities with 3 or more beds.
The “personal care home” classification more nearly resembles what we today call “assisted living” and the “domiciliary care home” is more of a board and care home, neither of which are included in modern statistics about nursing homes. To make things even more confusing, in later reports, the term “nursing home” sometimes refers to the first two categories combined, and in other reports only homes in the first category are counted as “nursing homes” and all three of the lower categories are grouped together as “personal care and other homes”.
Another problem in early surveys was making sure that all facilities had been identified and counted. The federal government provided no certification or oversight to the industry, so there was no “master list” to refer to. The surveyors relied partly on information provided by the state licensing bureaus, but the states all had different standards for licensing homes, and some of them had little or no information in their own files. For several years after the surveys were initiated, reports analyzing the data emphasized that there was no way to be sure whether facilities that appeared for the first time on a new survey were actually new nursing homes, or whether they had just been omitted from earlier reports.
The first ever national inventory of nursing homes was done in 1954. When the first survey was tabulated, it was estimated that there were about 270,000 people living in 9,000 homes classified as “nursing care home” or “personal care home with nursing”. Virtually all the homes were for-profit facilities — 86% of all nursing homes were proprietary, 10% were voluntary, and only 4% were public.
Government-Owned Nursing Homes Evolve
The traditional role of the county poor farm had become increasingly irrelevant since the inception of Social Security and Old Age Assistance in 1935, although a certain number of poor elderly still remained as the responsibility of the counties. Many of the poorhouses closed or were sold, but a few continued to operate as homes for the indigent elderly. The 1935 law created financial problems for the counties running nursing homes, because the residents couldn’t qualify for Social Security Old Age Assistance. In some cases, the 1950 Amendments created a new source of financing for both the operations and the cost of constructing or renovating buildings to meet new licensing standards, and the county poor farm became a nursing home. In other places, the tougher licensing standards were the last straw, and the county poor houses were shut down.
At the same time, by the middle of the 1950s new drugs to treat tuberculosis had been discovered, and they were far more effective than bed rest at curing the disease. OAA payments to patients in tuberculosis sanitariums were still prohibited in the new rules which allowed payments to patients in public institutions, and state and county tuberculosis sanitariums began to close or be converted to other uses. Some became hospitals and other became nursing homes in the early 1950’s.
Nursing Homes Treated as Healthcare Facilities
A consensus was building that facilities for the aged should focus on providing medical care, as well as residential care, and legislators decided to actively promote the development of skilled nursing homes. In 1954 the Hill-Burton Act was amended to provide funds to nonprofit organizations for the construction of skilled nursing facilities that met certain hospital-like building standards, if built “in conjunction with a hospital”.
The Hill-Burton amendments created a number of precedents. The changes represented the first time that legislation specifically included nursing homes as part of the health care system rather than the welfare system, and created an expectation that the physical design of nursing homes would be based on hospital design. The Hill-Burton regulations placed nursing homes under the jurisdiction of the National Health Service, ensuring that future regulatory oversight would be medical in nature, and they represented the first time that federal funding for nursing homes was tied to standards for construction and design, staffing patterns, and other medically-oriented concepts.
If all nursing homes had been built under these standards after 1954, some of the quality problems that later emerged might not have occurred. But Hill-Burton financing was limited to a small group of non-profits affiliated with hospitals, so these standards had little impact on the vast majority of new nursing home construction. Ironically, restricting the funds to hospital-affiliated non-profits was intended to increase the quality of nursing homes, but it had the opposite effect. Developers who couldn’t qualify for Hill-Burton funds continued to build thousands of new facilities with no reference to Hill-Burton standards. When regulators later decided that all nursing homes should meet the higher qualifications, it was too late. Trying to make the nursing homes fit the standards many years after they were built was nearly impossible.
Social Security is Expanded
Several amendments to the Social Security Act were made in the 1950’s, creating millions of additional people who would have a reliable source of income in their old age. In 1950, domestic workers; farm workers; non-farm, non-professional self-employed persons; and federal civilian employees not in the federal retirement system were brought into Social Security. In 1951, railroad workers with less than 10 years of service were added. In 1954, homeworkers and all self-employed persons except lawyers and medical professionals became eligible. In 1956, members of the military and all remaining self-employed persons except doctors joined.
Government Becomes Primary Payor for Nursing Home Care
The government was totally enmeshed in the business of providing nursing home care by the end of the decade. Various studies in the 1950’s found that about half of the residents in private nursing homes were public assistance recipients and that the federal, state, and local governments were paying about half the total cost of all nursing home care in the country. Federal and state reimbursement for the cost of nursing home care continued to increase throughout the decade.
“A 1953-54 survey of nursing homes found that 90 percent of the patients in proprietary nursing homes were aged 65 or over. Two-thirds of the aged patients were women. Only one-half could walk alone and one-fifth were completely bedfast. Public assistance financed, in whole or in part, the cost of care of one-half of all patients in proprietary nursing homes. Stated another way: The proprietary nursing homes of the United States are almost exclusively geared to caring for old people and to a great extent to old people on public-assistance.” Charles M Schottland, Medical Care through Social Security: What Lies Ahead?, Journal of the American Public Welfare Association, Volume 18, Number 3, 1960.
In 1956, amendments to the Social Security Act created a new, and separate, matching program for medical services like nursing home services, a program which would prove to be far more expensive than first anticipated. In 1958, Federal grants to the states for public assistance were further liberalized. Up to that time, all grants were split 50/50 with the state paying half and the federal government paying half. In 1958, the amount the government provided was based on the per capita income in the state, so that the federal government paid more than half of the cost of OAA in the poor states, and continued to pay half of the cost in richer states.
Boom in For-Profit Nursing Home Construction
The FHA loans required only small down payments, so the operators were very highly leveraged with weak balance sheets. The low down payments and generous terms, “guaranteed” reimbursement from the government in payment for services, and income tax benefits available to real estate operators made nursing homes attractive tax shelters for physicians and other individuals with personal wealth, drawing more for-profit operators into the field.
At the same time that all these new nursing homes were being added, older facilities were closing down, particularly the small home-based or “mom and pop” operations. Because of these closures, comparisons of the number of total facilities at the beginning and end of the decade understate the number of new facilities that were being added.
There are really no statistics on how many facilities closed and opened in those years, but we can draw some very general conclusions about the level of activity by combining data from a few sources. It is possible that about 3,000 nursing homes may have disappeared in the 1950’s and about 4,000 additional facilities may have disappeared in the 1960’s. If that is correct, the following table shows the high level of turnover that may have been taking place in the 1950’s and 1960’s:
Nursing Homes Opened and Closed During the 1950’s and 1960’s
| Beginning | Closed | Opened | Ending | |
|---|---|---|---|---|
| 1950's | 9,000 | -3,100 | 4,000 | 9,900 |
| 1960's | 9,900 | -3,900 | 9,000 | 15,000 |
| TOTAL | 9,000 | -7,000 | 13,000 | 15,000 |
New Construction Financing Available for Elderly Housing
New branches of the government got involved in the financing of long-term care in the late 1950’s, when legislation authorized the Small Business and Federal Housing administrations (SBA and FHA) to help finance construction and operation of proprietary nursing homes and nonprofit housing for the elderly.
In 1959 The Housing Act was amended by creating several programs to be administered by the Department of Housing and Urban Development (HUD). One program provided federal mortgage insurance to enable private lenders to make low-interest loans for the construction or rehabilitation of nursing homes, which were available to private, public operators, and non-profit operators. This was the first time that the federal government had provided any financial assistance to proprietary nursing home operators for the significant cost of building new facilities, and they took full advantage of it, greatly increasing the number of for-profit nursing homes in the country in the next few years.
Another program, called Section 202, provided direct, low-interest loans only to non-profit operators for the construction of housing for the elderly. Section 202 units could provide congregate meals, housekeeping services, personal care, social work/counseling services, or transportation for medical or social activities to people who lived in their own apartments in these buildings. Many church and fraternal organizations used this funding to add “independent living” apartments near their old age homes, creating campuses they started calling “continuing care retirement communities” or CCRC’s.
These programs were more than adequate to allow for the development of new facilities. Bruce Vladeck reports that a $100,000 loan from the SBA (the maximum offered) was enough to purchase a 25-bed nursing home at that time. (Vladeck, 1980) The new construction activity also raised awareness of the industry for both builders and lenders, drawing in new developers and providing additional financing from private sources, even for projects not covered by federal guarantees.
This new activity was good for developers but may not have been so good for the public. The FHA was concerned with housing, not health care, and the medical criteria laid out in the Hill-Burton Act were not required for nursing homes built or remodeled using FHA or SBA funds. Worse yet, nursing homes built with private, non-government financing had no federal standards at all to adhere to. Many of these new facilities were designed for residential rather than medical needs, and many had no affiliation with hospitals or health care systems.
A number of the developers had housing backgrounds, and they had no idea how ill many of their residents would be, nor did they know how to provide medical services to a chronically-ill population. It was a recipe for disaster for an industry caring for a very vulnerable, very ill population — hundreds of nursing homes were being constructed that couldn’t comply with federal safety or medical standards, and they were often run by people with no medical background.
Quality of Nursing Home Care National Concern
Not surprisingly, with government financial spigots open wide and few restrictions on what nursing homes should look like or how they should operate, quality issues started to come to the forefront. Among other problems, the lack of standards and the old age of many of the converted buildings made nursing homes fire hazards. When they did burn, there were often many deaths because they were filled with frail elderly residents who were unable to get themselves out of danger. One of the most tragic events was a fire in a nursing home in Warrenton, Missouri on February 17, 1957.
Although the headline says 71 died, the final death count was actually 72 residents from the Sunday morning fire. One of the articles in the St. Louis Post-Dispatch the following day reports, “Screams and cries of elderly patients trapped in the Katie Jane Memorial Home were quickly stilled by flames which engulfed the 2 1/2 story brick building within minutes…Rescuers worked frantically to assist as many as possible out of the doomed dormitory, but after the first several minutes they labored in an eerie silence broken only by the sounds of crackling flames, hissing streams of water and shouted orders of firefighters.” Inspectors reported that they suspected that there was a problem with the wiring in the home which might have caused the blaze, and they had been in the process of reviewing the home’s license.
A 1952 nursing home fire in Hillsboro, Missouri had claimed the life of 20 nursing home residents, and the impact of two major nursing home fires in five years stimulated the Missouri legislature into action. They met the day after the Warrenton fire and immediately introduced a bill to require sprinkler systems in all nursing homes and other institutions in the state.
A 1955 study by the Council of State Governments reported that the majority of nursing homes had low standards of service and relatively untrained personnel. Various states began to report problems. In response, the chronic disease program of the Public Health Service began to study state licensing programs and found that few states had adequate numbers of survey staff and that the qualifications of survey personnel varied widely.
In spite of all the problems, there was still resistance to making changes. Many states said that strict enforcement of the regulations would close the majority of the homes and no one knew what they would do with the residents. Buildings had already been built and were full, and residents who were living in them had no place else to go. Putting in controls after the fact was going to cause massive disruption. In 1957 the Public Health Service began to work with the states to create the “Nursing Home Standards Guide”, but it took six years to agree on what the standards should be, and the guide wasn’t finished until 1963. In the meantime, hundreds, maybe thousands, of new nursing homes were built.
In 1959, a special Senate Subcommittee on “Problems of the Aged and Aging” was established. The subcommittee reported that few nursing homes were of high quality and that most facilities were substandard, had poorly trained or untrained staff, and provided few services. But they concluded, “because of the shortage of nursing home beds, many states have not fully enforced the existing regulations, failure to do so reflecting the policy of the states to give ample time to the nursing homeowners and operators to bring the facilities up to the standards.”
