Nursing homes have had to deal with material supply shortfalls since 2020 and through worker shortages that have worsened in 2022. But their biggest challenge yet finds them dealing with once-in-a-generation inflation. Concerns are palpable for some already cash-strapped facilities facing occupancy issues and closure fears.
“Rising inflation over the past year, compounded with the long-term impact of the pandemic, rising labor costs, supply chain delays, and rising interest rates, is certainly putting downward pressure on skilled nursing operators,” said Scott Thurman, who oversees Greystone’s FHA Production.
The nation’s 40-year-high inflation, which exceeded 8.25% in September, replaced staffing as a top concern of skilled nursing and senior housing facilities, according to a new CNBC survey, as small increases in essential operating expenses are making a big impact — and aren’t easy to cut.
“I don’t think the rate of inflation has slowed down much in the last six months,” David Grabowski, PhD, professor of health care policy at Harvard Medical School, told McKnight’s Long-Term Care News. “I am also concerned about other rising costs, from inputs like PPE to more general costs like food, energy services and gasoline.”
Some states countered the inflationary blow with token reimbursement increases, but many experts question whether continued pressures will be met with similar relief in 2023, said Jeff Binder, managing director at Senior Living Investment Brokerage.
Then, there are providers that took bridge loans at 0.25% to weather earlier storms, only to face the possibility of being shut out of new borrowing opportunities, added Bill Kauffman, senior principal, National Investment Center for Seniors Housing & Care.
The most obvious concern remains an unstable workforce. Skilled facilities have hiked wages more than any other industry yet face the worst recovery numbers.
In the end, such wage pressures threaten to permanently change the industry, said NIC Chief Economist Beth Burnham Mace.
“Once inflation gets embedded in the heads of businesses and consumers, it’s very difficult to get rid of that expectation,” she said. ■