I am not sure if they are cheating people or if it really costs that much to run those facilities.
This statement may seem cold to some, but i think it is appropriate given the topic. I believe part of the reason for the increasing cost of medical care in the country is a direct result of large portions of our society not personally helping care for their aging parents/grandparents. This is, of course, a rather new development in society. This is true, not so much because of the cost of outsourcing the care, but more because people no longer have daily interaction with their elders to see the quality of life they lead.
That DOES seem a likely contributor to rising costs. And it is a logical outcome of modernity, if you think about it. Though the cost of most consumer goods has dropped a lot since the beginning of the industrial era, costs of the Big 3 (housing, education, health care) have risen fast enough to outrun the savings in consumables. At the same time, median real wages flattened beginning in the 70s/80s. For a few decades, people didn't feel the pinch that much because marriage was still the norm (that's changed; now I think the U.S. has more single than married people and age of first marriage keeps rising), and most households therefore had one home-maker spouse who could join the workforce. HOWEVER, entry of home-makers into the job market meant that they were then not available to do elder care, childcare, volunteerism, etc.
The job market shifted to be globalized and service-oriented. Blue collar jobs no longer paid as well. The best paying white-collar jobs often require (1) expensive education; (2) mobility and sometimes multiple job changes. This in turn caused a reduction in (1) marriage, (2) number of offspring, (3) and the tendency to settle in a job, buy a house, and stay in one community for much of one's adult life (benefits of which had been establishing a predictable set of housing expenses, encouraging accumulation of home equity, and encouraging saving). Instead, the median family has now became (1) smaller, (2) less stably employed, (3) relatively less financially stable, and (4) more scattered geographically.
It's like a self perpetuating spiral, that results in basic destabilization and, pertinent to this discussion, smaller or nonexistent local supports for aging family members. It's no wonder the industries of nursing homes, child care services, home cleaners, landscapers, etc., developed to fill the gaps.
Another related point:
Several people in this thread have recommended giving aging parents time instead of money. In theory, this is probably a good idea in most cases. But many people now live great distances from parents and, therefore, rarely see them in person. These distances require vacation time from work and expensive plane tickets in order to visit. In my own family (on both sides), you can see the trend: beginning with my great grandparents, each generation has had fewer kids and proportionally more of each generation has moved far away, usually because of schooling or job opportunities. Consider my 2 sisters and me: 1 of us is still in the town where we grew up and is within 4 hours' drive of quite a few relatives. However, the other 2 ended up 1,000 miles away in opposite directions across the country.
In order to effectively manage our mother's situation, I had to uproot her and move her far away from her life-long home and the bulk of the older family members. Thankfully, she cooperated. But that's a good thing possibly only from my perspective, since her move created more of a burden on HER sisters (who remained in the area) to care for THEIR aging mother! Family tensions resulted, and quite honestly, relationships have never been as good since.
Now, our father is currently in deep trouble (physically and mentally) for a variety of reasons that don't matter for purposes of my point. He is not safe to live alone, and he has gone from a net worth of nearly 2 million to less than 700K in 3 years. We are extremely worried about the longevity of his money, his physical safety, and the safety of those around him. But my point is this: How effectively, really, can I handle that situation from 1,000 miles away while working multiple jobs with erratic schedules?
Answer: I can't. One of my sisters has very little money and lives 1,000 miles in the other direction; she can do almost nothing. Therefore it falls on the sister who still lives in the same state to handle this as well as she can. In addition to 1 full time job and 1 part time job, she now has to handle constant calls and requests for help from our unstable father. She is spending many weekends driving 4 hours upstate in an old beater car; burning up vacation, sick, and leave time; reducing her own income; etc., just to meet with lawyers, doctors, etc., in an attempt to even STABILIZE the situation. And she actually works in social services and understands the system! She's totally exhausted and her life is currently entirely consumed by this situation.
This is a perfect example of why we need care facilities: because modern society no longer supports/allows most people to keep their own life, marriage, job, finances, etc., stable and functioning, while also spending a lot of time actively caring for aging parents. It's just a terrible dilemma, and I don't see that society figuring a way out of it any time soon.