More than 400,000 nursing home residents now in financially at-risk facilities could be facing displacement, according to a new industry report that has found “significant risks associated with the sector.” Threats include increased negative margins, more possible facility closures and challenges to capital access.
The report findings were presented Wednesday by the American Health Care Association and CliftonLarsonAllen, and provided stark insight into where the sector is financially as of now. The report used data from the most recent Medicare cost reports, Payroll Based Journal, Five-Star ratings, Medicare Advantage and claims data.
Findings showed average increase in wages for nurses at all levels doubled from 2020 to 2021. The firm projects that based on the potential 5% cut to the Patient Driven Payment Model and the end of public health emergency funding levels that the median 2022 year-end operating margin will be -4.8% with a median occupancy of 77.3% for nursing homes.
CLA also found that 32% to 40% of residents, or about 417,000, are currently living in nursing homes that are considered “at risk” financially — meaning they could be displaced if the projections come to fruition.
“The implications of these facilities at financial risk is very important,” said Deb Emerson, a CLA principal. “If facilities no longer receive enhanced Medicaid funding due to the end of the public health emergency and Medicare cuts PDPM rates by 5%, we estimate that more than 400,000 residents are going to be at risk of displacement.”
She added, “This would be a nationwide problem and we see these residents living in more than two-thirds of the US counties.”
The Good Samaritan Society has seen about five communities close within the last three months, according to president and CEO Nate Schema. About 70% of the operator’s facilities are in rural areas and many times they find themselves with more residents than they have the staff to serve.
“We have nearly 2,500 positions within our organization today,” Schema said. “We just need more help.”
“It’s critical that policymakers consider the whole picture and look at the totality of the impact the pandemic has had [these] two years so that we may carve a new path forward,” he added.