Analysis of nursing home capital reimbursement systems.
An increasing number of States are using a fair-rental approach for reimbursement of nursing home capital costs. In this study, two variants of the fair-rental capital-reimbursement approach are compared with the traditional cost-based approach in terms of after-tax cash flow to the investor, cost to the State, and rate of return to investor. Simulation models were developed to examine the effects of each capital-reimbursement approach both at specific points in time and over various periods of time. Results indicate that although long-term costs were similar for the three systems, both fair-rental approaches may be superior to the traditional cost-based approach in promoting and controlling industry stability and, at the same time, in providing an adequate return to investors.
Boerstler
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College of Business and Administration, University of Colorado, Denver 80204.
Carlough
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Schlenker
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D000067:Accounts Payable and Receivable; D002202:Capital Financing / Q000191:economics*; D003365:Costs and Cost Analysis; D003862:Depreciation; D006269:Health Facilities, Proprietary / Q000191:economics*; D007449:Investments / Q000191:economics; D007860:Leasing, Property / Q000191:economics; D008484:Medicaid / Q000458:organization & administration*; D008962:Models, Theoretical; D009735:Nursing Homes / Q000191:economics*; D012051:Reimbursement Mechanisms; D013221:State Health Plans / Q000191:economics*; D014481:United States