Elderly New Yorkers should carefully examine a nursing home’s finances before making their final decision, according to The New York Times. While full-blown insolvencies are rare, a poorly-run nursing home can offer a “bait-and-switch” type of scheme that lures the elderly in with its low costs, only to reduce services and increase costs in the years to come. According to the newspaper, elderly residents looking to join nursing homes or retirement communities with “joining” or entrance fees should be especially diligent about researching the finances of their facilities. These introductory fees, which can range between several hundred thousand to over a million, will not be returned if the nursing home fails to deliver services or increases its fees in the years, or decades down the road.
With little government regulation on the finances of these of retirement homes or retirement communities, potential residents must perform their own due diligence to ensure their future is safe and secure. This research can be performed by utilizing websites, such as Carf.org or MyLifeSite.net. However, these websites offering information about the finances of nursing homes usually charge a fee.
Aside from pricey websites, residents looking for financial information on a nursing home can ask the retirement home itself for financial information. From there, there are several indicators the residents should look for to find a solvent nursing home. First, aspiring residents should look at occupancy rates – it is generally a good sign if a nursing home has been at 90 percent capacity or above for the past few years. Second, a nursing home should typically only increase their costs about 3 or 4 percent each year, in order to adjust prices for inflation. If the premiums have increased more in recent years, be sure to ask the nursing home for an explanation.
Looking at the financial information of the nursing home can also provide information about its future profitability or solvency. A well-run nursing home will typically have a good debt rating and will invest in capital improvements to the facility, which may be expensive at the time but tend to save residents more money down the road. Importantly, the nursing home should have ample financial reserves, or a “rainy day” fund, and provide its residents some role in advising (or in some cases, managing) the affairs of the nursing home. If a nursing home meets these criteria for financial stability, it is more likely their residents will enjoy the peace of mind knowing they will retain the services they signed up for, and at a reasonable and fair cost.
