Another important aspect of the 1950 amendments to the Social Security Act was that federal matching funds were finally made available for the cost of providing for aged and blind persons in "public medical institutions other than those for mental disease and tuberculosis." This belatedly allowed governments to develop nursing homes, long after proprietary operators had dominated the market.
The traditional role of the county poor farm had become increasingly irrelevant since the inception of Social Security and Old Age Assistance in 1935, although a certain number of poor elderly still remained as the responsibility of the counties. Many of the poorhouses closed or were sold, but a few continued to operate as homes for the indigent elderly. The 1935 law created financial problems for the counties running nursing homes, because the residents couldn't qualify for Social Security Old Age Assistance. In some cases, the 1950 Amendments created a new source of financing for both the operations and the cost of constructing or renovating buildings to meet new licensing standards, and the county poor farm became a nursing home. In other places, the tougher licensing standards were the last straw, and the county poor houses were shut down.
At the same time, by the middle of the 1950s new drugs to treat tuberculosis had been discovered, and they were far more effective than bedrest at curing the disease. OAA payments to patients in tuberculosis sanitariums were still prohibited in the new rules which allowed payments to patients in public institutions, and state and county tuberculosis sanitariums began to close or be converted to other uses. Some became hospitals and other became nursing homes in the early 1950's.