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Analysis of nursing home capital reimbursement systems.

Authors
  • Boerstler, H
  • Carlough, T
  • Schlenker, R E
Type
Published Article
Journal
Health care financing review
Publication Date
Jan 01, 1991
Volume
12
Issue
3
Pages
53–60
Identifiers
PMID: 10110878
Source
Medline
License
Unknown

Abstract

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.

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