Dear Commissioner: Evaluation of the 709.3 Nursing Home Bed Need Methodology and Recommendations for its Revision

January 23, 2008

Richard F. Daines, MD
Commissioner of Health
NYS Department of Health
Empire State Plaza
Corning Tower, 14th Floor
Albany, NY 12237

Dear Commissioner Daines:

On behalf of the members of the State Hospital Review and Planning Council (SHRPC) I am transmitting a summary of an evaluation of the 709.3 Nursing Home Bed Need Methodology and recommendations for its revision.


The Department of Health is required to evaluate the Nursing Home Bed Need Methodology appearing in NYCRR 10 Part 709.3 by December 2007. The Department requested that the Planning Committee of the SHRPC conduct this review.

The 709.3 Bed Need Methodology was first developed in the 1980's when there were few community alternatives to institutional nursing home care and residential health care facility (RHCF) occupancy was consistently reported around 99%. The objective of the methodology is to assume the development of an appropriate residence for individuals requiring RHCF level of care. During this period the methodology included analysis of community based resources with the purpose of adjusting to the changing environment of expanded options for care available as well as policy to support individuals in the least restrictive environment.

The most recent iteration of the methodology was established prior to the rapid growth of post-acute care occurring in the RHCF setting, expansion of home options care and the proliferation of assisted living facilities. All such options permit individuals to remain in community or home-based settings. These environmental forces have contributed to a decline in RHCF length of stay and occupancy.

An acute care hospital stay is typically a trigger for long term services. In 2006 over 91% of post-acute and long-term care admissions followed a hospital stay. Today, RHCF length of stay has declined by over 50% when compared to ten years ago and admissions have increased by 50% due to increased utilization of RHCF beds for post-acute services. A substantial rise in the provision of occupational and physical therapy and closely supervised post- acute medical services provided in the RHCF setting have accompanied this increase in short-term admissions. In 2006, approximately 54% of patients discharged were for stays under 30 days and 22% for stays under three months; about 12% of patients discharged were included in stays over one year or more. The occupancy rate has been consistently at 94% over the last 6 years on a statewide basis.

The Medicaid program accounts for 75% of patient days in RHCF's, Medicare represents 11% of patient days and 10% are paid by commercially insured patients. Less than 4% of patients are self-pay.

Since issuance of the last revision to 709.3 in April 2004, the bed resource has declined significantly. For example, 5 nursing facilities closed in 2006 taking 414 beds out of the system; in 2007, 6 facilities closed for a loss of 595 beds. Thus, in the past two years, 11 nursing facilities closed thereby removing 1,009 RHCF beds from the bed resource.

  • In 2005, DOH implemented a demonstration program for hospitals to operate Transitional Care Units (TCU). Five programs were approved for a total of 96 beds; three are currently in operation as of December 2007. TCUs must follow Medicare regulations and qualified patients must have a minimum LOS of 5 days and a maximum of 21 days
  • In 2007, the Nursing Home Rightsizing Program, as part of the Commission on Healthcare in the 21st Century, has issued two RFPs, which have resulted in:
    • 1,832 beds decertified
    • 275 temporarily decertified
  • The current number of RHCF beds listed on the operating certificates as of August 2007 is 119,110 beds. Using the current methodology, the projected need is 123,403 beds. However, assuming the rightsizing approvals, pipeline beds and commission actions are all implemented, the licensed capacity would decline to 115,673 beds.

Aging of the NYS Population

New York State is experiencing an aging of its population. Forecasts suggest that the number of people age 65 and over will increase from 2.6 million in 2010 to 3.7 million in 2030 and will comprise about 18.3% of the state's population. An aging population bears a greater burden of chronic illness and disability, and a higher likelihood of chronic conditions, functional limitations, and disability. New York State faces a challenge in preparing to provide high quality health and social services to an increasing number of aged. While there may be a variety of methodological approaches to building a model to project the need for long-term care, there is general agreement that there will be an increase in the demand for long-term care services, simply due to the increasing number of elderly in the country.

Demand for long-term care is also impacted by attitudes towards aging and preferences for settings of care. National trends indicate that the elderly more frequently choose to receive long-term care services in settings that are less restrictive than nursing homes. In response to that trend, there has been growth in the supply of those alternative services and a leveling off of growth in the supply of nursing home beds nationally.

The settings in which the elderly are likely to receive care in the future have implications for the number and type of long-term care services needed and the use and availability of direct-care workers.

With approximately 90% of care provided by friends and family, caregiving is an important component of the long-term care system that has not been consistently and effectively analyzed from a policy perspective. If we are to plan for the future aging baby boom generation, those born between the years 1946-1964, it is important to understand the relationship between the demand for services and the settings in which services will be delivered.

Some fundamental issues inherent in planning for long term care include the following:

  • Models forecasting the demand for long-term care have limitations in the data sources used and the underlying assumptions used to develop the models. Planning for services must occur on a local and regional level.
  • Constraints in the Medicare and Medicaid programs may limit the availability to finance services in traditional settings and ultimately may provide more opportunity for innovation and support of home and community based services.
  • Trends suggest that the most likely sectors of future growth in long-term care services will be in assisted living/residential care and home and community based services. Consumers have expressed a preference for less restrictive settings.
  • Nursing homes, while still a major component in the long-term care system, have had slow growth rates and lower occupancy rates in recent years.
  • The demand for professionals and direct care workers (physicians, nurses, physical therapists, etc.) needed to care for the future population will be a challenge and the workforce will be augmented by unlicensed formal and informal caregivers.
  • Informal care, delivered by family and friends, will continue to be an important component of the long-term care system. The need for family caregiver support and training will continue to evolve in accordance with changing needs.

SHRPC Planning Committee

In May 2007 the SHRPC Planning Committee began its evaluation of the issues which affect RHCF need as well as the factors which are considered in the methodology.

The Report on Long Term Care, chaired by Stephen Berger, recommended increasing alternatives to RHCF care and emphasizing patient-centered care. The underlying policy principles which should guide the revision of the methodology is that residents of New York State should have access not only to a continuum of care but a variety of supportive living options which permits them to live in their homes and remain integrated in their community. To this end we expect the DOH will, as a matter of policy, continue to stimulate and encourage expansion and strengthening of this continuum beyond the walls of the nursing home. However, into the foreseeable future there will continue to be a need for RHCF beds and, therefore, a bed need methodology will be required to evaluate the need for additional beds within the context of utilization of existing capacity. With Medicaid covering a portion of the cost of 75% of patient days in RHCF, NYS has a vested interest in crafting a need methodology, which supports a documented, objectively determined need. Such methodology must ensure that Medicaid supports appropriate investment in the RHCF portion of the continuum of care.


The SHRPC makes the following recommendations with respect to revisions in the 709.3 RHCF Bed Need Methodology:

  1. The county should be used as the geographic unit of analysis. However, flexibility related to geographic realities and patient migration must be applied when interpreting the data. Recognition for relationships related to services and access between counties, differences between urban, suburban and rural counties and local factors must be considered when evaluating need.
  2. The use of a threshold trigger should be maintained. The current trigger in 709.3 is 97%. This means that if the overall occupancy within a county is less than 97%, then no need exists. Once again, the Department must retain that flexibility and use informed judgment in waiving the trigger if local factors exist which warrant an increase in regional capacity or the development of specialized programs which necessitate an increase in bed capacity.
  3. There will be new populations of post acute patients utilizing residential health care facilities. The DOH should continue to study and evaluate the utilization of nursing home beds for post-acute patients and distinctly incorporate its impact into the methodology.
  4. The methodology should continue to identify separate need estimates for TBI, pediatric and ventilator patients since they may be difficult to place and, remain in a more costly and less clinically appropriate hospital inpatient setting.
  5. Once the results of the TCU demonstration project are known, they should be considered for possible incorporation into the bed need methodology.
  6. The methodology should continue to recognize the regional availability of home health care, long term home health care, adult home, assisted living facilities and supportive living programs which would impact the need for RHCF beds. The methodology must take into account policy direction for increasing non-institutional services to reduce nursing home need for the future.

As you would expect the deliberations of SHRPC Planning Committee discussed a wide range of issues, which were important but tangential to the central task of revising the bed need methodology. I would like to use this opportunity to pass on additional observations, which would strengthen health planning in this area.

The SHRPC also urges that the 709.3 need methodology, once revised, be applied as a tool in the renewed use of a more regional approach to health planning. This regional orientation should include the selective issuance of requests for proposals for new nursing home beds in areas where the methodology indicates that bed need exists and the batching of multiple applications in individual service areas. The Department should continue to monitor the development of demographic models, which may provide more sensitive tools to use with respect to bed need and non-institutional utilization.

The SHRPC also believes that the insights gained in the development of the need methodology should be applied in the review of the more that $1.7 billion worth of pending applications for the renovation of existing nursing homes. The review of these applications can be an occasion not only to modernize nursing home infrastructure throughout the State but also to downsize facilities to appropriate bed counts, guided by an updated need methodology that takes into account the wider availability of care in less restricted settings.

I want to close by acknowledging the leadership of James Kennedy, Planning Committee Chair, Dr. Howard Berliner, Vice Chair, Dr. Anthony Lechich, who led the discussion on sub-acute care, and the members of the Committee who diligently debated the factors which comprised the 709.3 RHCF Bed Need Methodology. This, of course, would not have been possible without the support and expertise of DOH staff. We were particularly grateful to the DOH staff and outside participants for their effort and expertise in helping the SHRPC Planning Committee in its deliberations.

We look forward to continuing to work with the Department in developing and incorporating the recommendations contained in this letter to revise the 709.3 RHCF Bed Need Methodology and the long term care policy objectives for New York State.


  • Jeffrey A. Kraut
    Chair, State Hospital Review and Planning Council
  • James X. Kennedy
    Chair, Planning Committee


  • Mr. Clyne
  • Mr. Kissinger
  • Ms. Richards
  • Members, SHRPC