Please explain a "certificate of need" for a state to authorize more nursing home beds.

Igloo's post was on point. I have nothing further to add to what Igloo said.

Yes, jacobsonbob. You've pointed out another consumer misconception – the false idea that a not-for-profit community will cost less than a for-profit community.
For-profit vs. not-for-profit communities isn't a good criteria to use to judge a community. Many consumers like the 'idea' of not-for-profit. But, I've found, that the differences are minimal or non-existent.
Rental rates are based upon what the market will allow (which incorporates, competition, labor rates and availability, etc.). So, they vary pretty widely and don't, as you pointed out, depend upon whether or not it is 'for profit'.

IsntEasy, my mother was in a nursing home in central PA mainly because we had no assisted living available for her although she was getting to the point it wasn't safe to leave her at home. She was private pay, which was more expensive than the one she now is in near Cincinnati. Although the one in PA was nonprofit while the one is OH is for-profit, the former was considerably more expensive. I don't know if the one in PA accepted Medicaid but I know the one in OH does.

Here in PA, only nursing home care can be covered by Medicaid; a huge rip-off for the taxpayers, in my opinion. Once a person can't independently perform ADLs (Activities of Daily Living), they don't have the option of Assisted Living in PA. There are many people in nursing homes simply because they are poor, not because their care requires skilled nursing. The taxpayer is left with double the tab (or more!) and the patient is stuck languishing away in a facility with mostly very frail people. If any politician really had the will to save Medicaid dollars, they would change the law to allow Assisted Living care to be covered.

Re: all the communities being built... I don't know the market in your area, but I'd bet that they are private pay Assisted Living or Memory Care. So, here in PA (and other states), neither would be allowed to take on Medicaid patients.

Re: "Subsidizing"...Most nursing homes allocate beds for Medicaid patients, but the calculation is more complicated than "Private Pay patients are subsidizing Medicaid patients." Nursing homes need to stay pretty full to operate safely and efficiently. So, in addition to patients who are paying the full rate, they take on rehab (Medicare) and Medicaid patients. If a bed would otherwise be empty, occupying it with someone for less than the posted rate is preferable to leaving it empty. Think about an airplane – not every seat is sold for the same price because the goal is to fill as many seats as possible to make the flight cost-effective.

ps. CaptainOCaptain – a CCRC can admit from outside the community (at least in PA they can).

CON is state specific and is also applicable to hospital beds, skilled nursing beds, and nursing facility beds which will be participating in Medicaid. It is meant to contain Medicaid costs. Kentucky is one state that currently abides by a CON program. The private-only facilities are either assisted living facilities which are not covered under the CON law or either part of a CCRC. A CCRC is allowed to open up a certain percentage of beds but can only admit from their community.  Also, a company that "owns" a number of beds can transfer beds and combine beds to build newer facilities often with private rooms to attract private pay. We have a facility near us that is taking 60 beds from their 180 bed facility and moving the beds 35 miles away and combining them with another 60 beds taken from a facility 150 miles away to make a 120 bed facility. 

The answer to "countrymouse"....Medicaid pays the nursing home a fixed daily rate for medicaid residents based on a case mix index. Private pay patients pay "market rate". The nursing home rate is not enough to cover the cost of care and you can often tell the difference between an all Medicaid facility vs a shared pay facility.

There was an *over*supply of facility places in some areas? Blimey! Those were the days, eh...

Do you also find the same problem that we have, where publicly-funded (Medicaid in the US) residents are in effect massively subsidised by private payers? Or is Medicaid obliged to pay an NH's rates same as anyone else?

Dear "Igloo," Thank you for the explanation. It's a broader scope than what I interpreted from the ombudsman for Aging Svcs. It has been months of waiting for an availability and like I'd said, I'd seen several new facilities (for profit) communities being built/completed in Lexington, KY in the past year. So, I wondered, if there were all these new facilities, why the long wait? Thank you again, and I also enjoyed a good cup of coffee or two reading your note.

Ok heres my take on CONs, going to be somewhat long, perhaps get a cup of coffee.....
Certificate of Need came about in the late 1970's early 1980's as a technique to attempt to contain health care costs. CONs were to be done within HSAs (health systems agencies); & in turn HSAs were created to be formed within the long existing Area Council of Governments (COGs) throughout the US. All done via PL 93-641.

COGs are regional planning bodies that also can serve as a clearinghouse for grants & some charities. All states have COGs. Some like NM are a single state COG. Others divided into several "areas" usually along long established political turfs. Like TX has over a dz COGs. COGs are also called Area Councils. All those "Areas on Aging" that get referred to on this site are within a COG. Over the years Areas on Aging in some COGs have enough direct funding that they have their own quasi-independent status. The Houston area COG now has 2 entirely free-standing AoA buildings plus satellite offices in adjacent counties. But all still within HGAC, which is the COG for Houston region.

Under 93-641, HSAs found themselves having to deal curbing the explosion of facilities being built in early 1980's. This was the era of those first MRI buildings but a huge advancement in transplants and cardiac care & hospitals all wanting to build & buy the latest. (This was when Cooley & deBakey were frickin rockstars! & every town wanted thier own cardiac celebrity.) CON for building was to be issued by the HSA if "need" could be shown along with mortality & morbidity stats of providers submitting an application. CON had a public hearing component & appeals went to the parent COG. If there was any federal or state funding involved a CON review was required for builds over a certain $ amount. Except for maybe psych hospitals, all hospital & bigger clinic builds had to deal with CON.

Most states totally phased out CON before 2000. Imo due to consolidation of facility ownership. But some states still have CON. MS still does them. If your state still does CON, there -IMO - is going to have to be overwhelming financial & political pressure placed to get a company or health care firm to even think about an application. If your state has a low daily reinbursement rate for Medicaid, there's not enough profit margin to do a new build dependent on Medicaid paid beds.

As an aside on this...Did CON work? Well as a former HSA planning & CON staffer at a big HSA it's both yes & no. Didn't contain health care costs but not entirely due to CONs.... It did pretty well clear out facilities with low occupancy & therefore higher motality & morbidity. It did help create the large health science centers that can provide coordinated care & with level 1 ERs; research labs; medical schools & other allied health programs; deep residency & fellow programs; and pretty low morbidity rates.