''discharged" from the acute care inpatient hospital bed and admitted to the skilled nursing care or hospice unit or to their homes with provision of hospital-sponsored home health services.

Between 1983 and 1993 the number of hospitals reporting use of hospital-based skilled nursing services units more than doubled from 600 to 1,350. Areas with high AIDS caseloads have established special AIDS units. Other special care centers include cancer centers, transplant centers, designated high-level trauma centers, and neonatal intensive care units.

Nursing Homes

Although the nursing home sector of the U.S. health care system is not undergoing the rapid and intense turbulence occurring in the hospital sector, it is the recipient of seismic fallout from the epicenter of the earthquake (to continue Shortell's [1995] analogy). Fallout from the evolving patterns of reimbursement and delivery of care in hospitals, and other economic and demographic factors, are changing the characteristics of persons entering nursing homes and, therefore, the demand for nursing home beds. At the same time, persons needing primarily custodial care increasingly are looking for alternative long-term care settings. Hence, the sicker patients tend to concentrate in nursing homes. The increased acuity and disability of individuals needing long-term care are placing new types of demands on providers of care. This situation is exacerbated by the aging of the population.

The capacity of nursing homes to meet the increasing demand for services has been strained during the past decade. The demand for nursing home services and other long-term care services is growing with the increasing number of persons who are aged and chronically ill. The total number of licensed nursing facilities was about 16,600 in 1994 (AHCA, 1995). These nursing facilities had 1.67 million beds in 1994. Overall, the supply of beds in nursing facilities has not kept pace with the demand, especially in relation to the growth in the oldest-old population, those persons age 85 years and older (see Table 3.5). This demand will increase in the years ahead as the elderly represent an increasing proportion of the total population.

Occupancy measures the demand for nursing facility services and is often used as an indicator of an undersupply of beds. The occupancy rate in nursing facilities has remained high. The median occupancy rate nationwide was 93 percent in 1994. Wide variations are observed among states, from a high of 98 percent in Georgia, to 79 percent in Texas, to a low of 52 percent in Alaska (AHCA, 1995). Thus, some areas and states may have shortages of nursing home services and others may have an adequate or oversupply of nursing home beds (Swan and Harrington, 1986; Wallace, 1986; Harrington et al., 1992a, 1994a; Swan et al., 1993a; DuNah et al., 1995). In some states, such as Oregon, occupancy is down even when the supply is ratcheted down. Areas with shortages are

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