Can nursing homes withstand another surge?

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Most area long-term care facilities survived the first onslaught of COVID-19. Still, facility operators warn, the industry’s shaky financial underpinnings do not bode well. 

As COVID-19 dangers reemerge with the spread of the highly transmissible Delta variant and breakthrough infections begin to hit the vaccinated, how ready are area nursing homes to weather what could be a new surge?

In COVID’s initial swell months ago, New York nursing homes—including some Rochester-area facilities—were among the first to face tough scrutiny as deaths among their particularly vulnerable population mounted. 

Most but not all area facilities survived the first onslaught. Some have even prospered. Still, facility operators warn, the industry’s shaky financial underpinnings do not bode well. 

Staffing is the weakest link in their chain of defense against COVID, operators say. Attracting and retaining adequate numbers of the RNs, LPNs and certified aides needed to keep facilities operating smoothly is getting harder and harder. Operators mostly blame New York’s subpar Medicaid reimbursement rates and its consequent inability to pay competitive wages for their staffing ills.

Asked how his organization has withstood the pandemic’s onslaught so far, Jewish Senior Life CEO Michael King says: “We’ve weathered it pretty well.” 

However, he adds, citing the Delta variant’s emergence, “it seems like we’ve just had a short reprieve. What we’re in now is like a perfect storm or maybe an imperfect storm. Our primary source of reimbursement is Medicaid, and we lose $50 to $60 a day on each Medicaid resident. This has been going on for years. Now we have this level 6 hurricane, the pandemic.”

Staffing concerns

Staffing challenges and wage pressure have made for a difficult situation.

“Senior living communities don’t have the ability to say to our customers, we’re going to charge you $10 more for your food or $10 more a day for your stay to help cover (increased) costs,” King says. “We have to absorb it.”

King heads one of the area’s largest multilevel long-term care organizations. In addition to more than 300 skilled nursing beds, Jewish Senior Life’s Brighton campus includes assisted living, independent living and memory care units. It also runs an adult health care program administered by in-house medical staff. 

Michael King

Jewish Senior Life is a member of the Alliance for Senior Care Communities, a consortium of five of the Rochester-area’s largest nonprofit skilled nursing facilities. Other members are St. Ann’s Community, St. John’s Senior Living & Care, Episcopal Senior Life Communities and Friendly Senior Living, The consortium collectively accounts for some 2,000 nursing home beds, more than a third of the area’s total complement. 

Robert Hurlbut sings a similar tune to King’s. One of the state’s larger operators of for-profit nursing homes, Hurlbut runs a chain of a dozen Rochester-area skilled nursing facilities. Hurlbut Care Communities is a family-owned business. A third-generation owner, Hurlbut plans to pass the business on to his children.

Like King, Hurlbut is relatively sanguine about his facilities’ current state of affairs but uneasy about the future. His discomfort stems from concerns that echo King’s.

“We need to hire more people,” Hurlbut says.

He blames the pandemic-related boost in unemployment benefits for the dearth of LPN, RN and aide prospects. More might be willing to take nursing-home jobs in September when the most recent extension of pandemic unemployment payments runs out, Hurlbut hopes.

Hospitals, which unlike nursing homes were beneficiaries of state-directed stimulus payments that have helped offset revenues lost during the pandemic, are also short staffed and can afford to pay RNs and LPNs better than nursing homes, King says. 

James Clyne, CEO of LeadingAge New York, ranks staffing as the top challenge facing New York’s nursing homes. Leading Age is a Latham, N.Y.-based trade association that represents approximately 400 of the state’s nonprofit senior living organizations

Across the state, nursing homes “can’t get help now,” Clyne says. Like Hurlbut and King, he blames the “dismal” Medicaid reimbursements the state pays to nursing homes for most if not all of the problem.

The Medicaid problem

The margin squeeze Clyne and local operators describe is not a unique New York problem. A national survey released in June by the American Health Care Association and the National Center for Assisted Living—the largest U.S. association representing long-term and post-acute care providers—found that more than half of the nation’s nursing homes are operating at a loss. 

As troublesome as problems facilities elsewhere might face, New York’s are worse, Clyne maintains. Like King and Hurlbut, he sees the state’s Medicaid program as the root of those ills. 

Robert Hurlbut

Medicaid is a government insurance program meant to provide medical coverage to the poor. Its costs are more or less evenly split between the federal and state governments. Federal rules require certain minimum standards, but each state has considerable leeway in how its own program is administered. 

While New York nursing homes depend on Medicaid for well over half their revenues, says Clyne, the state has long treated nursing homes like an unwanted orphan. In terms of nursing home reimbursements, he says, “New York is the single worst payer in the country.”

To back up that contention, Clyne points to a 2017 study by Hansen, Hunter & Co., an accounting firm hired by the American Health Care Association. The study found New York nursing homes’ $292.42 average daily cost of care per resident in 2015 to be $61.32 short of the state’s average $231.10 reimbursement that year. 

Wisconsin actually had a larger gap, $63.71. No state paid full cost, but virtually every other state paid much more of long-term care facilities’ costs. Hawaii’s gap was $5.31 while New Jersey’s was $47.12.

“Those are the most recent figures available,” Clyne says. “The gap’s even wider now.”

New York’s $177 billion 2021-22 spending plan calls for the state to spend some $80 billion on Medicaid. Nearly half of that amount goes to pay for long-term care. 

Under a Medicaid reform begun by Gov. Andrew Cuomo in 2012, the state has attempted to curb costs by having private managed-care plans instead of counties administer Medicaid. In 2020, the state found that largely due to home-based care reimbursements, managed-care Medicaid costs had ballooned to 10 times the cost of nursing home payments. 

In the coming year’s budget, the state planned to dial back managed-care Medicaid payments to nursing homes, Skilled Nursing News reported last year, while also cutting skilled nursing facilities’ Medicaid reimbursements. 

According to Clyne, Medicaid reimbursements currently cover only 72 percent of resident days at New York skilled nursing facilities, a gap that on average leaves 45 percent of the cost not covered by Medicaid. 

Clyne unfavorably compares New York to Connecticut and New Jersey, which boosted their nursing homes’ Medicaid payments to provide additional support for extra pandemic-related expenses. New York implemented a 1 percent, across-the-board reduction to its Medicaid program, cutting reimbursements to nursing homes, managed long-term care and home health care payments. 

Connecticut, for example, gave its nursing homes a 10 percent Medicaid payment increase as an offset for extra pandemic-related costs, a boost that Clyne believes gives Connecticut facilities the ability to pay better wages than New York nursing homes.

“If you’re a certified aide or an LPN and you live near the Connecticut border,” says Clyne, “where are you going to look for work?”  

The cut in New York’s Medicaid rates came as expenses mounted, operators say. 

While the state’s Medicaid reimbursements fell during the pandemic, Hurlbut says, his facilities spent an extra $2 million on pandemic-related personal protective equipment.

At the height of the pandemic’s early surge, the price of disposable gloves quintupled, going from $7.15 for a box of 200 to $37.14, St. Ann’s Community CEO Michael McRae told the Rochester Beacon last spring.  

Grim picture

As margins grow tighter, staff shortages loom, and a resurgent pandemic looms, Clyne predicts more New York nursing homes will be forced to shut down. Fifty of the state’s nonprofit nursing homes have closed or been acquired by for-profit operators over the past year, he says.

Hurlbut also sees shutdowns as likely. Nursing homes can fall into a cycle of decline. As operating margins are stressed, services decline, occupancy rates fall below 80 percent and eventually homes are forced to close, he says.    

Locally, Hill Haven Rehabilitation and Traditional Care Center, a 288-bed skilled nursing home in Webster run by Rochester Regional Health, last month announced plans to shut down at an unspecified date this fall. 

Hill Haven’s current occupancy is 175, a number that puts it some 20 points under the 80 percent that Hurlbut says marks the lowest sustainable rate. 

In a statement, Jill Graziano, RRH senior vice president of extended care, did not specifically mention financial pressures, but did cite low occupancy, which she attributed to a nationwide trend “as more people seek alternatives to nursing homes.”

As of June 29, a posting on RRH’s website states, 75 Hill Haven residents had died of COVID. The Center for Medicare and Medicaid Services rates the facility’s care as below average. 

In a recent New York Times column, editorial board writer Michelle Cottle acknowledges that increasingly aging Americans are seeking alternatives to nursing homes such as home care or assisted living. 

However, Cottle also notes that “the need for institutional care will not vanish.” She echoes facility operators’ complaints, writing that “well before the current labor crunch, the industry was plagued by staff shortages and high turnover—a byproduct of demanding, poorly compensated work.”

Citing a need to revitalize “an industry in crisis,” Cottle calls for an industrywide overhaul that would see skilled nursing facilities adopt new care paradigms like the Green House model of elder care.  

A new approach

Begun by Ithaca geriatrician Bill Thomas M.D., the Green House movement calls for nursing home residents, whom Green House advocates prefer to call elders, to live in homey settings such as cottages that accommodate a dozen or so. It also calls for staff to be specially trained, and for elders, even those with dementia, to be given more autonomy than traditional nursing homes generally allow, handling some or all of their cooking and meal planning, for example.

Several Rochester-area senior care organizations including Jewish Senior Life and St. John’s have adopted or partially adopted the Green House model.

Jewish Senior Life several years ago completed an $80 million overhaul of its skilled nursing facilities, converting its 382-bed skilled nursing high rise from double-occupancy to single- occupancy rooms and moving a number of the tower’s beds into nine, newly built 12-elder cottages.

The project has been a complete success, King says. In line with the Green House’s predictions, the cost of operating such facilities turns out to be no higher and sometimes lower than a traditional skilled nursing set up, while resident and family satisfaction is much higher. While some area facilities struggle to maintain occupancy rates, King says, Jewish Life currently has a wait list of elders eager to move in. 

To complete the massive renovation project, Jewish Senior Life took out loans, which it will continue to pay off for years to come. While borrowing such large sums might have seemed risky, a far-seeing board made the right call in undertaking the project, King says.

At St. John’s, the experience has been mixed. Runyon originally envisioned building at least 10 Green House cottages that would be spread among various Rochester-area communities, while it downscaled and remodeled its 475-bed Highland Avenue skilled nursing facility. The organization completed one Green House cottage in Penfield, which is highly successful, earning an above-average CMS rating. But it was thwarted in carrying through the project further.

In 2014, CMS turned down the organization’s request to start construction on a second Green House in Henrietta, ruling that St. John’s could not add the Henrietta facility to its federal Medicare license. 

While he still considered the Green House model to “a great option,” Runyon, who was not available for comment this week, told me in 2014 that St. John’s could not afford the $180,000 it would cost obtain a new license. 

Though site work had begun some months earlier, St. John’s abandoned the Henrietta project and put other Green House plans on indefinite hold. 

Will Astor is Rochester Beacon senior writer.

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