78% of the nursing homes in Upstate are operating at losses, says Loretto CEO. ‘It’s reached a crisis point,” she says
By Deborah Jeanne Sergeant
All areas of healthcare experienced significant challenges during the pandemic, but not as extreme as the seismic shift in long-term care facilities.
Already struggling to care for a huge influx of aging baby boomers on decade stagnant budgets, facilities faced an employment crisis, supply shortages, increased protocols and greater demand as seniors sick with COVID-19 needed someplace to go after discharge from the hospital.
In more recent months, skyrocketing inflation and continuing employment and budgetary difficulties have pushed many nursing homes to the edge.
“Across New York State in 2022, all nursing facilities collectively lost more than $756 million,” said Joe Murabito, president and managing member of Elemental Management Group based Oswego. His business manages living facilities, residential care centers and rehabilitation and nursing centers in Oswego, Oneida, Monroe and Chemung counties. He is also part of the New York Providers Alliance, a group of 50 for-profit and nonprofit long-term care organizations from Buffalo to Lake Placid.
This figure comes from the New York Providers Alliance most recent report. Murabito said that the report clearly indicates that Downstate for-profit nursing homes made a $133 million profit as a group, but in every other category — nonprofits statewide and for-profits Upstate — “lost significant hundreds of millions of dollars,” Murabito said.
He believes this stems from Medicaid bias and disproportionate funding allocation.
“These numbers demonstrate while there’s a collective problem, a very big one, it’s not across the board,” Murabito said. “There have been influences over time that allow the for-profit nursing homes in Downstate to operate differently than all other in other areas.”
One factor is wages, employers in New York City have been paying mandated higher minimum wages compared with Upstate, which places Upstate employers in a position of trying to catch up. Despite ubiquitous budget struggles at long-term care facilities, Upstate facilities are spending proportionately more on wages to raise them to a competitive level.
Staffing shortages have caused lower occupancy rates. Upstate facilities lag around 83% occupancy rates while Downstate, the rate has rebounded nearly to pre-pandemic levels. To address this issue, many facilities are turning to staffing agencies similar to EU Workers interim pologne to fill essential roles and maintain quality care for patients.
“The census recovery for Upstate is much slower for skilled nursing,” Murabito said. “That’s part of the answer.”
The aging population both creates more demand for skilled nursing and thins the ranks of older workers. Murabito said that the projection of those 75-plus who will need assisted living or skilled care is 183% from 2016 to 2036, which he called “a significant increase in need and not the same labor projection to meet those needs. Whatever we’re feeling now for access, that will continue to get worse if we don’t find some way to incentivize people to work in the profession.”
He thinks that increased funding for both paying for education and more instructors will help bring in more care providers. Greater access to education through technology may also help, especially for mid-career workers.
Each day, the average Upstate facility loses $46 per person per day, according to the NYPA report. That averages $22 million per facility annually.
“The level of the crisis is higher than anyone knows,” Murabito said. “These losses are not sustainable. We’re approaching a ledge. There needs to be a targeted Medicare rate increase of 12%. The need is not at Downstate proprietary facilities.”
He added that in 30 years of working in the industry, he has not seen such dismal numbers.
“If these numbers aren’t addressed in the right way, this is a survival issue for a lot of facilities,” Murabito added. “You can’t sustain losses like this for more than a year.”
He said that hiring sufficient staff to meet minimum staffing requirements has been “a big challenge. We have significant agency use across the region.”
One of the reasons that nursing homes across the state are in such financial distress is that they have gone 15 years without a Medicaid increase. The most recent approved increase was supposed to be a combination of 6.5% from New York and 1% from the federal government, spread across three years. So far, facilities have received only half the amount for one of those three years and that the proposed 7.5% increase was folded into a $168 million approved by New York two years ago to fund a mandated staffing ratio legislation passed two years ago. The situation is like a company offering a raise and then a holiday bonus, but later reneging on the bonus, claiming that it’s part of their raise.
Low reimbursement, higher wages, shortage of workers
Kim Townsend, president and CEO at Loretto, said that the biggest challenges her organization currently faces are “in no particular order: the recently enacted staffing mandate, our unprecedented healthcare worker shortage and our low reimbursement rates.”
Although she agrees that proper staffing rates lead to high quality care, the mandates focus on medical staffing, which ignores therapists, social work staff and dietary staff.
“In long-term care, evidence-based practice suggests that the best staffing and care goes to the individual needs of the residents,” Townsend said. “Some residents require more clinical services; some require more social or therapy services. Their care plans should reflect the services needed for their wellbeing. A minimum staffing ratio sets that aside. It not only ignores the needs of the individual residents but also the important role that other staff members play in delivering their care.”
By demanding a certain number of clinicians, the mandate forces organizations to allocate funding to those roles rather than other important roles. The staffing shortage also makes meeting staffing mandates challenging. Townsend said that 20% or 400,000 frontline caregivers have left the long-term care industry since the pandemic’s beginning in 2019. Although some of those have shifted to other healthcare roles, she said that some have left healthcare as a profession.
“If you don’t have staff to staff beds, then you have to take those beds offline,” Townsend said. “In Central New York, we have 1,600 fewer nursing home beds online today than 2019.”
The lack of staffed, available beds in nursing homes affects more than just the elderly and their families.
When hospitals discharge an older patient who needs in-patient rehabilitation or long-term care, they’re unable to do so if beds are unavailable at an area nursing facility. Other patients needing acute care cannot receive admission right away if the hospital has no space to put them.
“That impacts every person who lives in this area,” Townsend said. “This is particularly pronounced in Central New York and Rochester.”
Her organization experiences up to a $100 loss per resident per day because the reimbursement rates have stagnated. Although other employers have raised their payrates, long-term care facilities cannot afford to do so.
Townsend likened the cost of a day at a nursing home to that at an average hotel, which is about $235 per day.
“You get a room, bathroom and maybe a breakfast buffet,” she said. “The average reimbursement rate for skilled nursing $235 per day. You get a room, meals, therapy, medical care, activities, dietary service, personal laundry, case management and therapy. There’s a real disconnect between cost of services and reimbursement.”
To help fund adequate levels of care, Townsend said that her organization has become more focused on community needs for high acuity care. Loretto’s restorative care unit allows people to discharge from the hospital three to five days earlier. They receive monitored beds and therapy at the bedside.
“We try to jumpstart their rehab and then they’re on the move to our regular rehab the remainder of their stay,” Townsend said. “This really helps our hospital partners, particularly those with cancer centers and trauma centers.”
Loretto also relies upon donations from community members and grants from private organizations in the state. The community also participates in Loretto’s mission through volunteering. Because many of their volunteers are retirees, their numbers are fewer since the pandemic.
“Volunteers provide a critical role in socialization and another pair of hands for basic needs,” Townsend said. “It’s not back to the way it was.”
Townsend fears for the entire long-term care industry. Offering other services such as rehabilitation, respite care and continuing care helps some long-term care organizations scrape by. But the widespread budgetary shortfalls and employee shortages make it hard to staff these additional revenue streams.
“Seventy-eight percent of the nursing homes in Upstate are operating at losses,” Townsend said. “It’s reached a crisis point.
“This was a system that was invisible in its crisis, but the pandemic made it visible. When occupancy dropped, costs went up and staffing problems appeared, you could really see the lack of funding from New York state.”
Unless funding increases, she foresees many nonprofit long-term care facilities selling to for-profit entities, which she believes operate more for the benefit of shareholders than to benefit the community.
Townsend believes that funding the education of healthcare workers, creating sufficient openings for education and providing sufficient qualified preceptors willing to work with clinical students are part of the solution to the workforce issues.
“We can’t afford to let our regional healthcare networks collapse,” Townsend said. “We have to have a smooth, functioning regional healthcare network. The long-term care piece of that is a critical piece to keep hospitals functioning.”