At some point, one of your loved ones may need the services and amenities found in a nursing home.
Nursing homes provide care and companionship for aging seniors.
They take care of needs that some family members don’t feel equipped or capable of performing.
While nursing homes can be a great option to ensure the longevity and health of your loved one, they tend to come with a price.
You may wonder what it is about nursing homes that makes them so expensive.
Why Are Nursing Homes So Expensive? (10 Reasons)
The average cost of a private nursing home room is $9,034 a month.
The average cost of a semiprivate nursing home room is $7,908 a month.
Certain factors like activities offered, location, medical staff experience, and availability determine how expensive a nursing home can become.
Let’s look at these factors in more detail.
1. Medical Care Costs
One of the main reasons why nursing homes are so expensive is because of medical care costs.
When a nursing home gets built, the architect has to carefully design each feature to ensure it’s useable by a senior.
That usually means they need to build ramps, railings, and other additions to the building.
This adds extra costs to the building of the home.
The home then needs some basic medical equipment that allows the staff to help its seniors.
If a senior resident gets sick, for example, the home should have something on hand to help them recover.
While a nursing home doesn’t have anything quite as extensive as surgery equipment, it usually has some low-tier equipment in-house.
Since the nursing home has to take on certain medical costs to run and operate, it needs to charge its residents higher rates.
The profit helps them cover those costs.
2. Utility Costs
A nursing home is not unlike an apartment, meaning it has utility costs.
Seniors living in a nursing home need electricity, plumbing, and usually some TV service—be it cable, satellite, or even a streaming service.
Some seniors also need reliable Internet access.
As those who grew up with technology become older, they’ll be more reliant on it, even in their old age.
All those utilities cost the nursing home money.
They don’t typically charge their residents utility costs.
Instead, the cost gets split between the residents.
This means that even if a resident doesn’t use a lot of electricity in their room, they’re still going to be pitching in to pay for the electricity for the entire home.
Nursing homes might have costlier utilities than other places.
They might use more water than other facilities because the seniors often take more time in the bath or shower.
If they have trouble seeing, then they might need the lights on more often.
Some seniors might also spend a lot of time watching TV.
Not only does this mean the nursing home is going to pay higher electricity costs, but they’ll also need to pay for cable.
Keeping seniors warm and cool during the changing seasons is also important.
They tend to get colder than younger people, so keeping them warm in winter may mean that the nursing home has to use more gas to keep the home feeling comfortable.
All these factors mean that the home faces higher utility costs.
Since utility costs fluctuate, the home has to make sure that it charges its residents enough to cover those changing costs.
That usually means high prices.
3. Rental Costs
Another reason why nursing homes are expensive is because of rental costs.
When you pay to live in a nursing home, you’re basically paying rent.
The rent prices are sometimes lower than what you’d pay at an apartment.
In some places, prices may be even higher.
There are a few factors that influence how much rent you pay.
One of them is how much rent or tax the nursing home pays to operate.
Every business usually has to pay something to operate where it’s located.
Businesses may try to buy the land where they want to build their locations.
In this case, the nursing home might need to take out a loan to cover the cost of land.
They’ll need to pay that back over time.
Some nursing homes might simply move into an existing building.
In this case, they usually have to pay rent to a landlord since they’re renting out their building.
At the very least, they need to pay some sort of tax to the government.
Since the nursing home needs to cover those costs, they need to earn enough revenue.
If the nursing home happens to be in a place where there’s a lot of demand for land, then it’s probably paying a lot of rent or taxes.
When there’s high demand but not enough supply, things become expensive.
As such, those nursing homes tend to have more expensive rental prices.
Certain amenities might also increase the rental price.
If the nursing home needs to build a pool, for example, then that’s going to cost them more.
Rent plays a big factor in determining how expensive a nursing home becomes.
4. Insurance Costs
Because nursing homes take care of seniors, they need to have some sort of insurance policy.
There are always people who are litigious if a family member becomes ill or dies at the nursing home.
To protect themselves, most nursing homes will take out an insurance policy.
The insurance policy might also cover certain expenses like ambulance trips when they need to bring a senior to the hospital.
The problem with insurance policies is that they can be expensive—particularly for businesses.
A nursing home might need to take out a big policy, too, since they’re dealing with vulnerable residents.
Even something as small as a slip and fall could result in a lawsuit being brought against them.
Insurance policies make nursing homes more expensive because they need to pay them each month or year.
The rates of insurance policies aren’t always set in stone either.
The company may choose to increase its insurance rate.
As a result, the nursing home ends up paying even more.
To ensure it’s able to cover those costs, the nursing home charges its residents high prices.
5. Medical Staff Costs
One of the biggest expenses that a nursing home has to pay is salaries for its medical staff.
Nursing homes usually have a blend of medical and non-medical staff members.
The non-medical staff usually take care of seniors day-to-day.
They’ll help them use the bathroom, give them baths, spend time with them, and help them get food.
The medical staff is there when the senior needs specialized care.
For example, while a non-medical staff member can likely give seniors basic prescriptions, some seniors may need more advanced care than that.
In this case, a medical staff member is on hand to help them.
The medical staff member is also there in case of emergencies.
They can help stabilize someone and decide if the senior needs to go to the hospital or not.
Medical staff members get paid more than non-medical staff members because they have medical training.
They went to school and either became a nurse or a doctor.
Since they have specialized training, they earn higher wages.
The more experienced the medical professional is, the more pay they will likely receive.
A nursing home may have several medical staff members on hand.
If they do, then they’re going to have more expensive rates since they need to cover those costs.
If a nursing home has a specialist, then the rates may even more expensive.
The specialist likely gets paid a good amount of money.
It’s also a marketing point for the nursing home since not every home in the area may have a particular specialist on staff.
Medical specialists draw in more seniors and cost the home more money, meaning that nursing homes are expensive when they have a medical staff.
A nursing home has limited space.
One of the ways that it tries to make more room is by giving seniors roommates.
How many roommates a senior has depends on the nursing home in question.
However, some nursing homes offer more expensive rooms at higher rates.
These expensive rooms allow you to have your own room or only one other roommate.
That’s ideal for seniors who value their privacy or want alone time.
It’s more expensive for a few reasons.
The first is that a private room means that the nursing home isn’t able to fit as many residents in its home as it might like.
That affects its ability to generate revenue.
To ensure it still reaches those goals, the private rooms come at a higher price.
Private rooms are also a luxury in the nursing home space.
A senior doesn’t need a private room to survive.
It’s just nice to have.
As such, if the senior wants a private room badly enough, then they’ll pay the extra price.
Finally, some nursing homes use private rooms as a way to market themselves.
They say that they have private rooms which allow seniors to have more independence and freedom.
To get that sort of privacy and freedom, they’ll need to pay a higher price.
Nursing homes are expensive if you choose to rent a private room.
7. Medicaid Takes Care Of Most Of The Costs
Nursing homes are also expensive because they know that most of their seniors are on Medicaid.
The advantage of Medicaid is that it pays for most, if not all, senior care.
That often includes a certain amount of money for nursing homes.
Seniors then have to pay the remainder.
Because Medicaid takes care of the bulk of the cost, nursing homes know that they can raise their prices.
No matter what, Medicaid is going to cover a large portion of it.
Since Medicaid comes from the federal government, the nursing home can usually rely on that money coming in.
However, not every senior has the extra funds to pay for what Medicaid doesn’t cover.
They may need to pull more money from their retirement accounts or even from social security to make up the difference.
Seniors who don’t have Medicaid are also left paying for the full expensive price on their own.
While this usually means they have a high-earnings retirement account or have enough money that Medicaid isn’t necessary, that isn’t always the case.
There are simply some people who don’t qualify for Medicaid.
As a result, they’re stuck paying the expensive price to stay at a nursing home on their own.
Because Medicaid often covers some of the expenses of staying in a nursing home, nursing homes raise their prices to get as much money from Medicaid as possible.
8. Dietary Services
Nursing homes are expensive because they have to cater to several different diets.
Seniors often have trouble eating and digesting foods that they once ate in their youth.
The body’s metabolism and digestive systems become worn down and not as efficient.
As such, seniors are often on specific diets.
Not all their diets are the same, either.
Someone might be on a high-fiber diet while someone else who suffers from diabetes may be on a low-starch and low-sugar diet.
Others may have voluntary dietary restrictions.
One senior might be a vegetarian while someone else may not eat certain foods based on religious beliefs.
As a result, the nursing home has to spend a good amount of money on different types of food.
Seniors often need high-quality food since their bodies are unable to digest it as well.
Poor-quality food may be difficult, if not impossible, to digest.
This means that nursing homes have to pay for expensive food if they want their seniors to flourish under their care.
Food is a constant cost, too.
It isn’t something the home can buy once.
It’s a regular expense that the home has to pay.
As such, they need a high rental cost to cover those expenses.
9. Activity Costs
Another big expense that nursing homes take on which makes them expensive is activities.
Many nursing homes will offer some sort of regular activities to keep their seniors happy and engaged.
It might be a pool, a gym, or even regular trips to local venues in a nearby city.
Those sorts of costs add to the bottom line of the nursing home’s finances.
The more activities that they provide, the more expensive the home becomes.
In return, seniors get opportunities to maintain their fitness.
They stave off boredom which helps keep their minds engaged.
It also opens opportunities to be social which helps them remain mentally focused and stimulated.
One of the reasons one nursing home might be more expensive than the other is that one provides more activities.
Bingo may cost next to nothing to play in a nursing home, but other homes that want their seniors to flourish in their care often offer other activities and amenities.
Those nursing homes are typically the more expensive ones.
10. Not Enough Room
A final reason why nursing homes are expensive is that there’s often not enough room.
There are usually only a handful of nursing homes in an area.
Baby boomers are the next generation to start filling nursing homes.
As their generation name suggests, there are a lot of them.
There may not be enough nursing homes to provide care for all the baby boomers seeking a nursing home.
As such, demand is going to outmatch supply.
When there’s more demand than supply for something, then the price goes up.
Until more nursing homes get built in certain areas, the price of nursing homes will continue to be expensive.
Nursing homes are places where seniors can live and receive care from people more qualified than their families.
Some nursing homes provide private rooms, better food, and even several activities for seniors to enjoy.
These factors tend to make nursing homes expensive.