Nursing homes have also been impacted by the development of a new industry, the assisted living industry, which has siphoned off residents that would have been in nursing homes in years past. Assisted living facilities charge about two-thirds of what nursing homes charge because they don't provide the medical services that nursing homes provide. Instead, they offer supervision and assistance with the non-medical needs of their residents.
Assisted living facilities do not rely on either Medicare or Medicaid for any significant part of their income, but instead provide services to people who are able to pay for that care out of savings or insurance. Since they do not provide care to Medicaid recipients, Medicaid recipients who can no longer remain in their own homes go straight to nursing homes, skewing the percentage of poorly-paying Medicaid residents in the nursing homes. Many people with private resources now elect to stay first in an assisted living facility, where, in many cases, they will use up whatever private funds they have. Once those funds are exhausted, they can no longer remain in the assisted living facility, and those who do not die in the assisted living facility often end up as Medicaid residents in a nursing home, again increasing the pool of Medicaid residents in nursing homes..
The assisted living industry of today is largely unregulated, as was the nursing home industry in the 1970's. However, most states are in the process of adding or increasing the regulation and oversight of the industry. Many states are also beginning to develop programs to provide assisted living to Medicaid residents, in the hope that they can reduce program costs by substituting the lower cost of assisted living for the higher cost of nursing homes for those recipients.