Nursing homes face financial hardship as a result of COVID

The expected wave of consolidation comes amid an outbreak that has sickened about 80,000 residents of Illinois long-term care facilities and killed more than 10,000 people. While vaccines and infection control measures have recently helped prevent the kind of outbreaks that marked the darkest days of the lockdown era, healthcare providers are now grappling with a new variant. COVID more contagious. Add to that the lingering fear of contagion among families weighing the pros and cons of caring for elderly loved ones at home versus in a facility, and it’s no wonder nursing homes are reporting that ‘they are on life support.

“Our census is recovering, but it is recovering so slowly,” said Donna Sroczynski, president of operations for the Symphony Care Network, which has 28 locations in Illinois, Indiana, Michigan and Wisconsin.

Sroczynski says the average number of people Symphony serves per day is down about 20%, from pre-pandemic levels. At the same time, expenses have increased by at least 30% due to the hiring of additional staff, testing requirements and securing personal protective equipment.

“This is a recipe for disaster,” Sroczynski says.

While COVID-19 has brought new challenges, it has also exacerbated long-standing problems facing an industry tasked with caring for some of the country’s most vulnerable residents.

In fact, only a quarter of nursing homes and assisted living communities nationwide are confident they will last a year or more, according to a recent survey of 738 facilities by the American Health Care Association and the National Center for Assisted Living. While most nursing home operators are private companies and therefore keep their income and profit margins a secret, more than half of those who responded to this survey said they were operating at a loss.

According to a separate business group analysis, the nursing home industry has forecasted to lose $ 22.6 billion in revenue this year and that 1,670 facilities will close or merge.

Meanwhile, publicly traded Brookdale Senior Living reported a net loss of $ 108 million in the first quarter of 2021, compared to net income of $ 369 million in the same period a year earlier. And revenue fell 26% to $ 749 million in the quarter. Brookdale, based in Brentwood, Tennessee, is the nation’s largest senior living company, with approximately 700 assisted living, skilled nursing, and other locations in 41 states, including 11 communities in the Chicago area.

Nursing home occupancy rates have declined steadily for decades as assisted living and home care have become more popular among those requiring a lower level of care. But nursing home occupancy fell sharply during the pandemic as hospitals postponed elective surgeries, which meant fewer referrals for post-acute care.

Meanwhile, to prevent outbreaks when COVID testing was scarce, many nursing homes have refused to admit people who may have been exposed to the virus during a hospital stay. And people with access to home services have avoided high-risk collective living spaces for fear of infection.

Even before COVID-19 began to spread, the number of long-term care facilities in Illinois had declined nearly 10% to 913, alongside a 14% drop in admissions, from 2015 to 2019 , according to the latest state data.

Today, Illinois nursing homes are 63 percent full on average, about 10 percentage points below pre-pandemic levels, said Matt Hartman, executive director of Illinois Health Care. Association, which represents approximately 500 senior care facilities in the state.

Hartman says four members of the association have closed in the past few months alone and that even more facilities are expected to close until the end of 2021, especially as federal COVID relief funds grow. exhaust.

A nationwide staff shortage further complicates matters for nursing home operators. During the pandemic, nursing homes have seen workers leave the industry in search of better paying jobs with less risk of exposure.

The shortage has created a bidding war for talent. To attract workers to the Chicago area, some nursing home operators say they are raising wages and offering signing bonuses.

“The pandemic has really laid bare just how problematic the nursing home staff shortage is as it has been around for decades, but it has only worsened during COVID,” says Tamara Konetzka, economist at the nursing home. health at the University of Chicago. “Physically and emotionally demanding” jobs are often without benefits or sick pay, she adds.

Many operators say they have to dig deep to entice workers, noting that low Medicaid rates don’t cover the cost of doing business. However, lawmakers and advocacy groups have called for more transparency during the pandemic about how much facilities are spending on staff and quality. For example, many nursing homes maintain their businesses as a separate entity from real estate and other valuable assets, which can protect businesses from liability.

To prevent nursing homes from taking advantage of it when staff numbers remain low and three or more residents are crammed into every room, lawmakers are seeking to tie new funding to specific safety and quality measures that benefit patients. residents and reduce racial disparities in health.

The Illinois Department of Health Care and Family Services, which spends more than $ 2.5 billion a year on nursing home services for approximately 45,000 Medicaid beneficiaries, supports the proposal. The government health insurance program for the poor and disabled covers the majority (about 60%) of nursing home care in the state each year.

Nursing home operators are also bracing for a flood of COVID-related lawsuits.

Law firm Levin & Perconti represents families affected by the COVID-19 outbreak at the state-run LaSalle Veterans’ Home at the end of last year, during which more than 200 veterans and members staff have tested positive for the virus and 36 veterans have died, according to an April report from the Office of the Inspector General of the Illinois Department of Human Services.

And about 1,000 nursing home lawsuits are underway, according to Healthcare Heroes Illinois, an advocacy group that raises awareness about immunity and liability issues.

“This is an existential threat to the industry,” Healthcare Heroes spokesperson Paul Gaynor said. “And the pandemic is not over.”

Sroczynski declines to say whether any lawsuits have been brought against Symphony, which is among the operators who experienced epidemics during the pandemic. But she notes that “the entire Illinois industry is being harassed by predatory lawyers.”

Amid all the uncertainty, COVID relief funds have been a lifeline for nursing home operators during the pandemic.

Last year, HFS distributed $ 359 million in CARES Act funding to long-term care facilities, which also received approximately $ 520 million directly from the federal government. And an additional $ 75 million has recently been allocated to facilities.

“As these dollars run out, you will start to see more and more operators going out of business,” Hartman said. Even though pre-pandemic occupancy rates in Illinois are below the national average, facility closures in some areas are preventing residents from getting care near their homes and families, he says.

Some struggling facilities will seek to find a partner who can help them stay afloat. For example, Kevin McGee, CEO of Smith Senior Living, two communities, says the company was approached by two local establishments looking for a buyer.

At Smith Village and Smith Crossing, “we have support for nursing at the corporate level, we have support for purchasing, we have support for business office functions,” said McGee. “These one-site organizations that are alone, they raise their hands and say, ‘We can’t do this no more. We have to join a system. “”

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