The senior care industry in the U.S. was under pressure before the pandemic. As 2022 and the third year of COVID’s influence approaches, it’s not easing up.
A host of trends say the industry’s battering is not yet over:
- The reluctance to live in a COVID epicenter helped occupancy rates among long-term care facilities to plummet from 85% in January of 2020 to 68% a year later. By September, they’d only crawled back up to 74%.1
- Losses of $94 billion between 2020 and 202122 will be a challenge to recoup, especially since graying Americans would rather get old at home, and 90% of those over 65 are already doing so.3
- Worsening finances notably affects staffing, but food and infection control; only a quarter of nursing homes believe they can last another year.4
Survival of the fittest? Absolutely. Organizations that recognize and act to counter or leverage some deepening trends will do best in the new normal that’s evolving. Among them:
1. Staffing shortages – a never-ending issue
Moderate to severe staffing shortages are being reported by 89% of nursing homes and 82% of assisted living facilities.5
It’s not a new problem but a worsening one, especially as vaccine hesitancy among these workers could squeeze employers more as vaccine mandates grow. Adding to concerns is the risk of rising workers’ compensation claims as existing staffers put in longer hours for others who leave over vaccines or burn out from stress.
There’s still no easy solution; organizations can’t go wrong by adopting a longer-term, holistic and strategic approach to risk management. The stronger the base of workers, the greater the ripple effects across the enterprise, resulting in improved patient and employee safety and quality of care and reducing the risk of employment liability. Enterprise risk management is becoming instrumental in identifying where and how employee investment can help address the labor shortage.
2. Value-based care – transition looms
Value-based care (VBC) continues to gain traction over traditional fee-for-service payment models, with the encouragement of the Centers for Medicare & Medicaid Services (CMS).
Increasingly, payers are moving that way, too, requiring that a substantial percentage of Medicare Advantage payments be value-based.
It will accelerate the transition to VBC in 2022 among long-term care organizations, and assist in their recovery.
With VBC, payments are tied to the quality of care delivered, rewarding efficiency and effectiveness. Under normal circumstances, it incentivizes providers and operators to keep residents healthy and out of hospitals.
One issue has been the COVID waiver of the “three-day stay” requirement for Medicare coverage of hospital and post-discharge costs. That may have slowed the uptake of VBC by long-term care organizations, but even so, it has an impact. In one example, half of the residents in two buildings run by one senior living operator were under VBC. It saw a hospitalization rate of 5% to 10% among them during the height of COVID in 2020; the rate hit 65% among those not under value-based care.
The approach can add bottom-line benefits and makes a good selling point for prospective residents and their families, especially as they transition to different levels of care. But making the model work will take a concerted effort to align the interests of providers, operators and payers. Motivation and training will make the difference.
3. Enterprise risk management will determine who wins
Siloed risk management is a sure path to unmanaged or poorly managed risks. Long-term care operators aren’t too different from healthcare operators in bucketing their risks by functions, like clinical, human resources and safety.
Between employee burnout and staffing shortages, and a focus by regulators on the big issue – resident care and safety during the COVID era – too many basic safety measures are falling through the cracks.
It’s made a case for enterprise risk management (ERM), a more holistic approach that views all risks by how they’re connected and influence the whole.
At some point – likely in 2022 – safety inspections will go back to basics. Organizations that have adopted an integrated ERM approach to safety will achieve multidisciplinary accountability, and ensure organizational readiness, especially to manage uncertainty.
In the end, they will have a much better story to tell regulators, patients and residents, and, of course, their insurers.
Pete Reilly is the practice leader and Chief Sales Officer of global insurance brokerage Hub International’s North American healthcare practice. In this role, he directs and coordinates HUB’s healthcare planning, growth and strategic initiatives. He also works with other leaders and experts within HUB to develop and introduce proprietary products that will help healthcare organizations and providers across the care delivery spectrum.
The opinions expressed in McKnight’s Long-Term Care News guest submissions are the author’s and are not necessarily those of McKnight’s Long-Term Care News or its editors.