Analysis of nursing home capital reimbursement systems.
Date of Pub
Carlough, Tom; Schlenker, Robert E
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.
Reimbursement Mechanisms : Accounts Payable and Receivable : Capital Financing/economics : Costs and Cost Analysis : Depreciation
: Health Facilities, Proprietary/economics : Investments/economics : Leasing, Property/economics : Medicaid/organization &
administration : Models, Theoretical : Nursing Homes/economics : State Health Plans/economics : Support, Non-U.S. Gov't :
Support, U.S. Gov't, Non-P.H.S. : United States