“Right-sizing” nursing homes

State officials are developing a plan to dramatically reshape the state’s long-term care system, just as demand for it is expected to skyrocket.

The effort — referred to as “right-sizing” the system — is aimed at allowing more seniors and people with disabilities to live in community settings rather than institutions.

If it goes as officials hope, nearly one in four nursing home beds in the state won’t be needed within the next two decades — at least according to projections being used by state officials. They’re planning to award millions of dollars in federal grant money to nursing homes looking to diversify their business models.

Those leading the effort say it’s about creating choice, removing the barriers that make it harder to get Medicaid-funded long-term care at home than in an institution.

“We’re designing a system that will someday support us,” Dawn Lambert told a roomful of people helping to design the effort, including state agency officials, home health care and nursing home industry leaders, long-term care recipients and advocates for seniors, people with disabilities and mental illnesses.

Lambert is project director for Money Follows the Person, a federal-state initiative to help people in institutions move into home- or community-based settings and rebalance the long-term care system.

Doing so requires transforming not just the care system, but the infrastructure of a state sorely lacking affordable, accessible housing and transportation options. There will be a need for community supports to help people avoid being isolated at home, and a major increase in home care workers, who are already in short supply.

The shift will also require a more subtle change in the way care is thought of, those behind the effort say, from a sometimes-paternalistic model that treats people as patients in the care of an institution to one that emphasizes independence, choice and the right to take risks, including getting less care than professionals might advise. While many nursing home residents are seniors, the changes will also affect people with disabilities and mental illnesses, some of whom live in nursing homes.

Many longtime advocates for rebalancing the system say they’re cautiously optimistic, saying previous resistance seems to have subsided, and policy changes are starting to reflect a move toward expanding home- and community-based care. Gov. Dannel P. Malloy‘s administration has already announced plans to expand Money Follows the Person, and Malloy issued a controversial executive order establishing a path for home care workers in state-funded programs to gain collective bargaining rights, citing the expected increase in demand for personal care attendants.

“I don’t think we have any choice,” AARP Connecticut State Director Brenda Kelley said. “The services that we currently have are not what people want. They’re not what people need, and we can’t afford it.”

The nursing home industry is participating in the planning process, and leaders have acknowledged that a shift toward more home care is inevitable. The industry understands that an overreliance on institutional care, mixed with the looming demographic trends, will lead the state to a long-term care system that’s unaffordable, said Matthew V. Barrett, executive vice president of the Connecticut Association of Health Care Facilities, which represents nursing homes.

But he and others have questioned the projections that the state can lose 7,000 to 9,000 nursing home beds at a time when the senior population is expected to surge.

“The consequences of getting it wrong could be significant in terms of access to care, especially when you consider the dramatic aging of Connecticut’s population,” he said. “Particularly not just the over-65 population but over 75, over 85 and over 90, who are more likely to need high-quality nursing home care.”

Deborah Chernoff, a spokeswoman for the New England Health Care Employees Union District 1199, SEIU, said that while some of the discussions stem from advocates for consumer choice, the effort is also a push to save the state money.

“Really this is all being driven by economics, and I think that’s a problem because then it’s not about consumer choice, and it’s not about what’s the best setting for this particular person to get care,” she said. “It’s what’s the cheapest way to do it.”

And planners need to be mindful of the broader public policy implications, she warned. Expanding the use of home care could save Medicaid dollars, but what if it’s at the cost of nursing home jobs that, unlike many home care jobs, provide health benefits and higher wages?

The ‘Alligator Chart’

Long-term care is undoubtedly a massive budget issue for Connecticut. It has historically been the biggest cost to the state’s Medicaid program, which is itself the largest single item in the state budget. And Connecticut’s demographics are poised to make its hit even more acute.

Connecticut’s future can be illustrated by the “alligator chart,” called that because it looks like a pair of alligator jaws, open wide. The upper jaw represents the projected population of state residents aged 65 and older, which is expected to rise by 64 percent by 2030. The bottom jaw, pointing slightly downward, represents the projected working-age population, expected to decline by 2 percent.

About 40,000 people now rely on Medicaid to cover long-term care. The program is the primary payer for the services in the state; many people who were considered middle class receive the government coverage for nursing home or home care. By 2025, according to the consulting firm Mercer, 60,000 people will.

Despite that, Mercer has projected that the state will need 7,000 to 9,000 fewer nursing home beds by then, if the rebalancing efforts take hold as anticipated.

That’s because while 54 percent of Medicaid long-term care recipients received their care at home or in community settings in 2010, Mercer projected that the proportion would rise to 83 percent by 2025, leaving just 17 percent in institutional care.

Lambert, the Money Follows the Person project director, noted that the goal of the state’s effort isn’t to reduce nursing home beds; it’s to give people a choice in how they receive long-term care, making it just as easy to get services at home as it is to go to a nursing home.

She predicted that the balance of home and institutional care will change dramatically by word of mouth as people increasingly become aware that living in the community while getting care is an option.

“You will see exponential change over the next couple years,” she said.

Nursing homes

The right-sizing effort includes money to help nursing homes take on different roles, such as serving as hubs for a continuum of long-term care services, adult day care, home health agencies, or emergency backup systems for situations like this year’s October snowstorm that left hundreds of thousands of people without power.

Mag Morelli, president of LeadingAge Connecticut, which represents nonprofit providers of aging services including senior housing, home care, assisted living and nursing homes, said there will always be a need for high-quality nursing home care. But she described the right-sizing process as an opportunity.

In the past, she said, nursing homes have struggled to make changes that respond to market demand. A state moratorium on adding nursing home beds and flat Medicaid funding in recent years have made it difficult to create new systems of care, she said, and regulations have made it hard for nursing homes to diversify their models in some cases. Some nursing homes have wanted to devote a portion of their sites to assisted living, she said, but Medicaid is very limited in what assisted living it will reimburse.

“It’s a scary time. Change is scary,” Morelli said. “But I think we need to look at it as an opportunity, and that’s what we’re doing here.”

Barrett said there’s interest among nursing home operators in diversifying what they do. But he said the tools to encourage nursing homes to make changes must include payments for reducing their bed capacity.

“It’s not just about dollars and cents, but because these beds have value, then to take them out of the system requires compensation,” he said.

There are pockets where the system is not particularly efficient, and a thoughtful plan to reduce bed capacity — not just paying low Medicaid rates and leaving nursing homes to close — could make sense, Barrett said

But he noted that despite a proliferation of home care agencies, homemaker and companion agencies and assisted living, Connecticut nursing homes are still, on average, 91 percent full, and far from dying.

Lambert cited the same figure at a recent meeting, but described nursing home capacity as being at “only” 91 percent. And she noted that nursing homes are having all-time highs in occupancy problems, despite the closing of five homes in the past two years that led some residents to fill beds at the remaining homes. (Twenty-four percent moved into the community.)

She predicted that the nursing home population will continue to fall.

“It’s like a big snowball,” Lambert said. “It’s getting bigger and the momentum is there.”