Boom in For-Profit Nursing Home Construction

The FHA loans required only small downpayments, so the operators were very highly leveraged with weak balance sheets. The low downpayments and generous terms, "guaranteed" reimbursement from the government in payment for services, and income tax benefits available to real estate operators made nursing homes attractive tax shelters for physicians and other individuals with personal wealth, drawing more for-profit operators into the field. 

Windsor Park Nursing Home, 212-240 Hillside Avenue, Jamaica, NY, 1957
Library of Congress: Architecture and Interior Design for 20th Century America Photographs by Samuel Gottscho and William Schleisner, 1935-1955

Not all the activity was in new construction. FHA funds could be used for remodeling as well as constructing new buildings. A number of nursing homes were created from buildings built for other purposes, like homes, motels, or old hospitals abandoned when newer hospital buildings were built with Hill-Burton financing. 

Plains Convalescent Home, Plains, GA
Built as Wise Sanitarium, a hospital, in 1921. Former President Jimmy Carter is born here in 1924.Converted to a nursing home in 1957. Library of Congress: Historic American Buildings Survey (HABS)

Dalton-Herbert Houses, Alexandria, VA
Built as private homes, converted to Wise Tavern. Later converted to Ann Lee Memorial Home. Library of Congress: Historic American Buildings Survey (HABS)

Amos Allen House, Providence, RI
Built 1793-1798 as private home. Acquired by Episcopal Convention in 1945. Acquired by Diocese of Rhode Island and leased to tenants as "old people's home" in 1959. Library of Congress: Historic American Buildings Survey (HABS)

At the same time that all these new nursing homes were being added, older facilities were closing down, particularly the small home-based or "mom and pop" operations. Because of these closures, comparisons of the number of total facilities at the beginning and end of the decade understate the number of new facilities that were being added. 

There are really no statistics on how many facilities closed and opened in those years, but we can draw some very general conclusions about the level of activity by combining data from a few sources.  It is possible that about 3,000 nursing homes may have disappeared in the 1950's and about 4,000 additional facilities may have disappeared in the 1960's. If that is correct, the following table shows the high level of turnover that may have been taking place in the 1950's and 1960's: (IOM, NCHS)