have been increased by failures to meet standards, but the highest classifications (Class A homes) must be presumed to meet at least the Federal minimums.

The average Medicaid payment to nursing homes in Connecticut is $339 per month. This is close to the median for all Medicaid States, ranking 23rd in the 49 jurisdictions. (Please see Table 1). Thus, in Connecticut, not notably a low cost State, nursing homes of a classification which may be presumed to meet or exceed all Federal minimums can realize profits averaging from 35 to 45 percent on the basis of a Medicaid payment which is equalled or exceeded by almost half the States.

The dramatic influx of new capital into the nursing home industry with the advent of Medicare and Medicaid as third party payers also suggests that the economics of the industry in Connecticut is not atypical. An industry which loses money on more than half its customers does not expand. An industry which shows above normal profit possibilities attracts capital.

A vigorous program of enforcement of minimum standards certainly will result in a great deal of agitation for increased payments. This agitation will be based largely on the mythology relating to rates and standards and State and Federal program administrators must be prepared to counter it with facts. This is one of the important reasons for the additional staff positions proposed in Option 5. A portion of these positions should be devoted to obtaining facts on nursing home operations, costs, and profits and assisting States in establishing rational bases for rate setting.

Average Medicaid payments in some States are obviously too low. Requirement of adherence to minimum standards will result in a legitimate, and probably demonstrable, need to increase payments in those States. For purposes of this analysis we have assumed that valid needs for increased rates may be revealed in States in which the average payment is less than $300. Table II shows that the estimated increase in program cost, if the average payment were increased to that level in all States, would be $51.6 million annually in total of which the Federal share would be $32.1 million.

It should be emphasized that we are not predicting that increases in program costs in these amounts will occur. We offer these figures as an estimate of the upper limit of cost increases which could legitimately be attributed to a program of standards enforcement at a point in time at which the program has been successful in achieving universal compliance with minimum standards.

A more realistic expectation is that the actual and necessary increases will be less and assumed gradually over several years. However, it should be noted that the full cost impact amounts to only 3.4 percent of the amount Medicaid is now paying for nursing home care. This is a modest premium indeed for the sake of getting proper value from the one and a half billion tax dollars which are otherwise being spent and for the sake of faithfully executing the laws.

APPENDIX 8

MEMORANDUM FROM FAYE G. ABDELLAH, DIRECTOR, OFFICE OF NURSING HOME AFFAIRS, PHS, TO SPECIAL ASSISTANT UNDER SECRETARY, DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, OCTOBER 22, 1974 Subject: Ratio of Patients to Personnel-A Limited Guide for Patient Staffing.*

The ratio of patients to personnel as a guide and an index to the amount of care available to patients is a crude index at best. But over and above, the ratio is not an indicator of quality of care.

Let me explain. The assumption is often made that the total time expressed in the ratio is time available for patient care. This is not necessarily true because ratios may or may not exclude from the total time activities spent on activities which are not patient care activities e.g. charting and doctors' rounds.

In addition, some ratios were merely accepted without critical study prior to adoption. For example, the ratio utilized in a number of hospitals in New York which were identified as providing good medical care were adopted by other institutions on this basis alone.

Another method that has been utilized to develop a patient/personnel ratio is that of identifying the "number of tasks" to be performed by nursing e.g. bed baths, enemas, injections, etc., and staff accordingly. Ratios based on the number of tasks to be performed leaves much to be desired because many patient needs are not met and patient care is often fragmented. This is due to two factors. First, patient teaching, communication and referrals are not included among the tasks and second, continuity of care is also lacking since the tasks are performed by different persons and the patient is not able to identify or relate to one person as "his nurse."

Ratios cannot answer all the questions pertaining to staffing since staffing is complex. There are many factors to be considered when staffing units in either acute or long term care units. These factors include: patient numbers and characteristics; staff competency and staff supervision; unit design; and logistic support to nursing service. For example, there is a difference between staffing based on 100.0 percent occupancy versus the needs of patients. In order to staff to meet patient needs, some institutions build on a basic staff or the minimum number of staff needed to operate a unit. Complementary personnel are added to the basic staff when indicated to provide the additional patient care required.

Further, the interrelationships among and between factors affecting staffing are not clearly understood. For example, hospitals with larger and more active medical staffs usually have higher occupancy rates. Indications are that with a greater proportion of specialists among the

*For additional discussion of this issue, see pp. 22-24.

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active medical staff, the greater the proportion of non-nursing personnel among the hospital employees. This would be expected since specialists utilize a greater number and variety of ancillary medical workers than do nonspecialists. This may indicate a greater complexity with a greater number of coordinating, scheduling and preparatory pro cedures being delegated to nursing.

As has been mentioned, there are many factors pertaining to staffing that need to be considered. Many of these factors have and are being studied. No one single method e.g. patient/personnel ratios will provide the answer. The many questions that still remain need research to provide the answers.

REFERENCES

FAYE G. ABDELLAH, Assistant Surgeon General.

Aydelotte, Myrtle K., Ph. D. Nurse Staffing Methodology: A Review and Critique of Selected Literature. Washington: Superintendent of Documents, U.S. Government Printing Office, DHEW Pub. No. (NIH) 73-433, January 1973. Price, Elmina M., R.N., ED.D. Staffing for Patient Care: A Guide for Nursing Service. New York: Springer Publishing Company, Inc., 1970.

Simmons, Leo W., Ph. D., and Henderson, Virginia, RN, M.A. Nursing Research: A Survey and Assessment. New York: Appleton-Century-Crofts, 1964.

APPENDIX 9

LETTER FROM SENATOR FRANK E. MOSS, CHAIRMAN, SUBCOMMITTEE ON LONG-TERM CARE; TO REPRESENTATIVE WILBUR D. MILLS, CHAIRMAN, HOUSE WAYS AND MEANS COMMITTEE, AUGUST 15, 1974

DEAR WILBUR: As we begin to see the broad outlines of a compromise National Health Insurance bill emerging, I wanted to write and urge your special consideration for the health and especially the longterm care needs of older Americans.

As chairman of the Subcommittee on Long-Term Care of the U.S. Senate Special Committee on Aging since 1963, I can tell you that these needs are critical. My Subcommittee has just completed a massive study of this problem based on 22 hearings since July 1969, and more than 3,000 pages of testimony. Our forthcoming Subcommittee Report will detail the chronicle of government insensitivity to the unmet needs of one out of five older Americans.

I. THE NEED

In the context specifically of long-term care, a June 21, 1974, working paper by Burton D. Dunlap of the Urban Institute projects (I think correctly) that some 3 million older Americans require some degree of long-term care from personal care to 24-hour a day skilled nursing. Subtracting 1.1 million, those whose needs are not purely medical, i.e., those who need help with meal services and the minimum supervision found in congregate living facilities, leaves 1.4 million who require home health services, and 600,000 as the unmet need for nursing home care.

Few older Americans can afford the care they need

There is no question but that the great majority of our senior citizens cannot afford the care they need. Few can afford the services of a home health nurse at $3.50 or more an hour. Still fewer can afford nursing home care which averages $625.00 per month as compared to the $310.00 in income received monthly by the average retired couple.

II. CURRENT PROGRAMS ARE OF LITTLE HELP

As the 1970 Task Force Report on Medicaid and Related problems noted: "Long-term care is a neglected and underdeveloped area. Medicare and Medicaid are not efficient and effective mechanism for dealing with the problem."

A. Medicare

Medicare authorizes coverage for home health care under both Part A and B of Medicare and skilled nursing home care under Part A but these services are of little help to older Americans.

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Home health.-According to the July 9, 1974, audit by the U.S. General Accounting Office, home health expenditures declined from $115 million in fiscal year 1970 to about $75 million in fiscal year 1973. Clearly, home health expenditures constitute far less than one percent of Medicare's $12 billion total outlays.

Nursing home care.-The latest statistics from the Social Security Administration indicate that Medicare pays only 6.5 percent of the nation's total nursing home bill or about $200 million. Some time. ago Mr. Art Hess, Deputy Commissioner of Social Security Administration, told my Subcommittee that only 70,000 individuals on any given day out of the one million patients in U.S. nursing homes have their care paid for by Medicare.

Why Medicare is of so little help

In both the home health and the nursing home context reimbursement under the Medicare program is limited to individuals who require and qualify for the intense nursing attention known as "skilled nursing care." According to Mr. Thomas Tierney, Director of the Bureau of Health Insurance, the removal of the word "skilled" from the existing statute or the specification of lesser levels of care would do much to open up the program in both the home health and institutional areas.

B. Medicaid

Unlike Medicare which is totally Federal, Medicaid is, of course, a grant-in-aid program which sees the Federal government paying from 50 to 83 percent of the cost of services provided to needy indigents. Medicaid authorizes payment for two levels of nursing home care, skilled nursing home care and intermediate nursing home care, as well as the broad spectrum of home health services.

Home health. My 1967 amendment to the Social Security Act required the states to provide home health care as a precondition of participating in Medicaid. It is now one of the six essential services which must be provided, but HEW has not insisted on anything more than token compliance. Unlike Medicare's home health coverage, Medicaid's home health benefit is not limited to "skilled nursing care". Nonskilled nursing and even preventative nursing can be provided but is seldom offered. In fact, a May 24, 1974, report from the Social and Rehabilitation Service, DHEW, points out that in 1972, the U.S. spent only $24 million out of $5 billion for home health care under the Medicaid program.

Oregon provided coverage for only 10 recipients at a cost of $2,160; Wyoming paid 12 people a total of $3,392. Missouri provided for 36 recipients at a cost of $1,637. More than half of the total $24 million was spent by the state of New York ($15.5 million) to cover about 33,000 recipients.

Since Medicaid is a state-federal matching program, the only obstacle to Medicaid's providing home health care to more seniors is that the states must be willing to provide the services. Many states apparently have not been willing to do so or could not afford to do so. This is tragic in view of the universally accepted premise that viable home health services rendered in time can maintain individuals in their own homes, postpone and prevent institutionalization, with the added benefit of savings to the taxpayers as compared with the cost of nursing home placement.