Before 1965, owning and operating a nursing home was seen as risky business. That's because prior to then, there was no Medicaid, meaning families had to subsidize the care of infirm, elderly loved ones on their own. That meant there was no guarantee these centers would be consistently paid.
It was in this climate legislators passed a measure that would make it easier for nursing homes to get decent rates on loans for everything from new construction to remodeling to obtaining equipment. This program, under the National Housing Act of 1959, allowed for reduced interest rates on loans that were federally-guaranteed by the Department of Housing and Urban Development.
Today, the nursing home industry is booming, with for-profit centers accounting for a growing percentage of the market share. Even though there is little need to continue offering the reduced, federally-backed interest rates to these centers, the program persists. But what's worse, according to a recent investigation by The Center for Public Integrity, nursing homes that received an abysmal one-star federal rating for care quality apparently have no problem securing these advantageous rates - even when those poor ratings persist for years.