TRAVERSE CITY -- "What we're looking at is the start of what's going to be a real financial crisis in the nursing home industry," says Bortz Health Care Nursing Home administrator, Mark Crane.

Bortz Health Care in Traverse City is like several nursing homes across the country.

The senior facility faces the reality that a recession combined with state government cuts could affect services, even lead to a closure.

"On the federal level they're talking about substantial cuts also for the next five to ten years.  So, we'll have dramatic impacts in the nursing home industry, and I really think if these cuts happen you're going to see parts of the nursing home system start to collapse," says Crane.

Crane says the recent state cuts of Medicaid reimbursements by 8% is one of the main factors creating concern.

"An 8% cut now puts a cut in Medicare because the nursing home industry is able to make money on their Medicare reimbursement and the money they make for Medicare helps offset what they lose in Medicaid," says Crane.

It's these state cuts that could force Bortz Health Care to make cuts on top of ones they've already made in the past five years.

Crane says if and when the cuts happen, staff would be the first to go, mainly because 75% to 80% of the nursing home's costs are employees.

"If we have to make cuts then you look at staff and you cut costs you then cut quality of care....The question is what happens to a vulnerable elderly who need placement.  Where will our elderly go?  If you start to collapse the system financially that's a huge problem," says Crane.

Crane says he expects nursing homes in poor urban and rural areas to be hit the hardest financially, since they relay heavily on Medicaid reimbursements.