Many providers may seek protection for the product they market today, while others will diversify and develop new products to keep pace with a changing market place. New assisted living licensing categories which require more privacy and autonomy may displace older shared occupancy models. Providers who build new facilities that reflect current consumer preferences face challenges for what to do with an existing facility. Can it be sold, rehabilitated, or converted to another use? If not, is the organization solvent enough to withstand its closing? As states develop policy, the interest and vision of those directly affected are likely to influence the direction of new public policy.
States can help nursing home owners deal with a changing market. Nursing homes can diversify their product mix, convert portions of a facility for other uses including assisted living, or provide in-home services. Although many states do not track nursing home conversions to assisted living, the survey responses from six states indicated that 72 nursing facilities have converted 2,428 beds to assisted living. Responses from seven additional states reported that a total of 117 facilities had converted to assisted living, but the number of nursing home beds involved was not known. The largest number of conversions has occurred in Iowa (24 facilities and 1,114 beds) and Kansas (38 facilities and 952 beds).
Legislation passed in Nebraska in 1998 provides $40 million in grants or loan guarantees to nursing homes to convert wings or entire facilities. The program will be administered by the Nebraska Department of Health. Grants will be made when conversion is considered efficient and economical. Grantees must agree to maintain specified occupancy levels of Medicaid beneficiaries for a period of ten years. The Department will develop rules specifying minimum occupancy rates, allowable costs, and refund methods. Grants may cover capital or one-time costs and operating losses for the first year to facilities that have participated in the Medicaid program for at least three years. Facilities must provide 20% of the cost of conversion. Facilities may convert existing space or construct additional space to include assisted living or other alternative services. Construction of a new assisted living facility may be funded if the nursing home beds are de-licensed and it is more cost effective to construct new space rather than convert old.