Skilled nursing providers have been working hard to reduce agency dependency in the wake of the pandemic and rising labor costs.
Now, some will be rewarded for those efforts.
New York Gov. Kathy Hochul (D) in late December signed a measure that allows nursing homes that reduce their use of agency nursing staff to keep more of the money they make. In 2021, lawmakers passed a law requiring nursing homes to spend at least 70% of their revenues on direct patient care, including 40% on staffing. The same measure also capped profits at 5%, with any excess due to the state.
That was followed by the adoption of a new staffing mandate in 2022, which went into effect in April. In August, the state began notifying facilities that were non-compliant and threatening them with $2,000 daily fines, which have yet to be meted out.
Still, the pressure of the two combined rules during an unprecedented labor shortage is threatening the survival of some of the state’s 611 facilities — including about 75% that can’t yet meet staffing requirements despite making some gains.
“What we were seeing in New York is we have a long-term care workforce crisis that is causing a healthcare crisis,” Stephen Hanse, president and CEO of the New York State Health Facilities Association, told McKnight’s Wednesday.
“Those laws are forcing nursing homes to utilize temp agencies. And the cost for those agencies is significantly higher than if they were their own employees,” Hanse added.
Labor, providers team up
The association worked with leaders from labor union SEIU 1199 to amend the spending law and create an incentive for providers to do more to recruit and retain their own permanent employees and reduce use of agency staff. It does not walk back overall staffing requirements.
The four-year penalty reduction offers a 50% lower penalty for facilities that reduce agency use by 30% or a 25% reduction for those that lower their use by at least 20%. It covers the use of registered nurses, licensed practical nurses and certified nurse aids, and is retroactive to Jan. 1, 2023.
Both patient advocates and providers have acknowledged that using temporary staff, who may change regularly, can be disruptive for operations and upsetting to some patients. Hanse said the cooperation on the agency-reduction incentive was recognition that “consistent assignment is essential for the health and well-being of residents.”
When the penalty-reduction bill was introduced this spring, its sponsor, Sen. Gustavo Rivera (D-Bronx) said the idea was for facilities to focus “efforts and resources on identifying quality, long-term staff that meets their staffing ratios, not for them to spend all of their funds on staffing agencies that further promote an unstable workforce, while using those inflated salaries to meet care spending requirements that don’t actually improve care.”
Hochul delayed signing the bill until the end of the year, but in an approval memo she said she supported its goals of ensuring “residents receive high-quality care and nursing homes are not forced to rely on costly staffing agencies.”
