November 2024
By: Kelly Asche, Senior Researcher
After the release of our report exploring the declines in nursing facility beds, we received a question wondering if there was any relationship between facilities that closed and the type of license (nonprofit vs. for-profit) they were under. So let’s explore that question.
Between 2005 and 2024, there were 10 different categories of license types for facilities providing nursing home beds:
- Church related
- City
- County
- City-County
- Corporation
- Hospital district or authority
- Limited Liability Company
- Nonprofit corporation
- Partnership
- State
Table 1 provides the number of licenses for each type of license in 2005, as well as that category’s share of total licenses. Nonprofit corporations took up the largest share of license types, with 45% (185 licenses), followed by corporations (19%), church related (14%), and limited liability companies (8%).
Table 1: The number of each type of license for facilities that were providing nursing home beds in 2005. Data: Care Providers of Minnesota; Minnesota Department of Health, Nursing Home Licensing
Let’s look at what happened to these facilities by license type (Table 2). Of the facilities that existed in 2005, 90 of them were no longer providing nursing home beds by 2024. Nonprofit corporations had the highest number of closures with 37 (41%). This was followed by corporations (24%), church related facilities (13%), and limited liability corporations (9%).
Table 2: Ninety of the facilities that were providing nursing home beds in 2005 were no longer providing them by 2024. Data: Care Providers of Minnesota; Minnesota Department of Health, Nursing Home Licensing
What we want to determine is whether a type of license has lost licensed facilities at a higher rate than what we would expect. For example, although nonprofit corporations made up the highest share of facilities that no longer offer nursing home beds (37 out of the total 90, or 41%), they also make up the highest share (45%) of the total licenses. Essentially, if the cause of facilities closing had nothing to do with the type of license, then we would expect the proportion of closure by license type to match the proportion of license types when all were providing beds in 2005.
Table 3 compares that license category’s share of total open facilities in 2005 to that category’s share of facilities no longer open by 2024. All the license types have similar proportions except for one: corporations. In 2005, 19% of all facilities held corporation licenses, but they represented nearly 25% of the facilities closed by 2024.
Table 3: Comparing the share of total licenses in 2005 with that category’s share of closed facilities by 2024 shows one outlier: corporations. Data: Care Providers of Minnesota; Minnesota Department of Health, Nursing Home Licensing
The economics and policy environment in which nursing facilities operate is incredibly complex. This analysis is not meant to say that there’s a problem with corporate licenses, but rather, it highlights that there might be something unique about this license type that makes it difficult to operate these facilities sustainably. It’s an indication that a deeper examination is necessary to understand why these types of facilities are closing at a higher rate.