The crisis in skilled nursing care

Finding beds for patients who need skilled nursing care has long been a problem for Rochester hospitals. Since COVID, that problem has reached crisis proportions.

Known in hospital jargon as ALC patients, short for alternative level of care, the average number of such patients occupying beds at Strong Memorial Hospital, the region’s largest acute-care facility, has soared. It has increased from 11 at the end of Strong’s fiscal year in 2018 to 94 as of July 3, 2024.

Strong and Highland hospitals are part of the University of Rochester Medical Center’s UR Medicine system, the region’s largest health care system.

For the URMC hospitals and for Strong and Highland in particular, “COVID broke the bank,” says Kathy Parrinello, Strong and Highland president and CEO.  

Rochester Regional Health is the area’s second-largest health system. Its Monroe County hospitals include Rochester General and Unity. RRH officials point to similar difficulties.

Citing “creative” measures RRH has taken over the past two years, Alise Gintner, RRH senior vice president of extended care, says that RGH and Unity are in better shape to cope with the chronic excess of ALC patients and continuing shortage of acute-care hospital beds than they were at COVID’s peak. Nevertheless, she concedes, “it’s still a crisis.”

Shortage of beds

For Strong, says Parrinello, accommodating the needs of patients who require skilled nursing care takes nearly 100 acute-care beds out of commission at a time when such beds are in perilously short supply.

Following past patterns, Parrinello expects Strong’s daily ALC census to rise to more than 100 as flu and COVID admissions increase in the fall. While such numbers might seem easily manageable for a hospital with nearly 900 licensed beds, she readily assures that it is not.

Managing nearly 100 ALC patients on any given day requires setting up a unit to accommodate them, says Parrinello, which means taking out of service some beds that normally would be dedicated to coronary-care or post-surgical patients.

It also means that beds are not readily available to place patients entering through the emergency department, leaving many to wait in makeshift accommodations for extra hours or even a day or more before they can be settled into an appropriate unit.

Acute-care hospitals are not set up to provide skilled nursing care, notes Kelly Luther, URMC senior director of social work. Such patients require different services than the coronary care or post-surgical patients the hospital is set up to treat.

It’s not that hospitals cannot find nursing home beds at all, Luther says. It’s that they can’t find them fast enough. When hospitals find skilled nursing placements for ALC patients, equal or greater numbers are waiting in the wings, keeping ALC censuses stubbornly high.

While care delivered to ALC patients by hospital staff is medically adequate, Luther explains, in acute-care settings, such patients do not have access to dining halls, lounges, and activities and social contacts that skilled nursing facilities provide.

Across the state, hospitals have long struggled with moving patients in need of higher levels of care into nursing homes in a timely fashion. When COVID hit, those problems increased exponentially.  

Roots of the crisis

Bottlenecks of ALC patients have historically posed greater challenges for Monroe County hospitals and continue to do so. The reason: for nearly 25 years, the abrupt 2001 shutdown of the financially troubled Genesee Hospital has left the county’s hospitals routinely dealing with occupancies topping 100 percent while other regions’ hospitals have often struggled with low occupancies.  

The Finger Lakes region has the fewest number of hospital beds per capita in the state, according to figures compiled by the Hospital Association of New York State.  

Hospital and nursing home officials alike point to a chronic shortage of nursing home beds as the other big factor. Money—specifically, inadequate Medicaid reimbursements—is to blame, they agree.

One of the area’s largest nonprofit skilled nursing facilities, St. John’s Home, sits on Highland Avenue overlooking Highland Park. It is licensed for 455 beds, but in recent years financial pressures and staffing challenges have forced it to take two floors out of operation.

Citing steadily increasing overhead costs and the state’s low Medicaid reimbursement rates as the cause, “we are losing $125 per resident a day on Medicaid residents,” laments Charlie Runyon, St. John’s CEO.

Charging private-pay patients a rate more in line with the actual cost of care helps offset Medicaid losses. But at any given time, Runyon says, 70 percent of St. John’s residents are on Medicaid. Nearly all of the state’s nursing homes also are largely dependent on Medicaid payments, which fall short of the actual cost of providing care, he adds.

Rohm Services Corp. CEO Robert Hurlbut, whose Hurlbut Care Communities network consists of 11 for-profit nursing homes in the Rochester area, tells a similar tale.

In all, the Hurlbut homes are licensed for 740 beds. Hurlbut has kept 40 beds out of operation for several years. Inadequate Medicaid payments make it impossible to fully staff all the beds his homes are licensed to run, he says.

In slightly more than a year, his nursing homes have collectively lost $1 million, Hurlbut says. On average, the ratio of 70 percent Medicaid to 30 percent private pay holds true at Hurlbut’s nursing homes. Like Runyon, he traces the losses to less-than-adequate Medicaid payments.

The Medicaid challenge

Nursing homes’ expenses—facility maintenance, supplies and other overhead costs, but mainly staffing—have continued to rise, Hurlbut says.

Hospitals and nursing homes alike have long struggled with shortages in nursing and other clinical staff. COVID exacerbated the problem, creating more financial pressure.

While he theoretically could hire staff sufficient to return his homes’ now-shuttered beds to service, says Hurlbut, “I just couldn’t afford to pay them.”

The same is true at St. John’s Home, Runyon says.

Hiring more staff would require higher payments from Medicaid, a government insurance program meant to provide health insurance coverage for the poor. The federal government and each state roughly split the cost of providing Medicaid. Sticking within broad guidelines set by the federal Center for Medicare and Medicaid Services, each state designs and administers its own Medicaid program. Twenty-one percent New York’s $36 billion Medicaid spending annually is allotted for long-term care.

Beginning in July 2023, New York froze Medicaid rates. While technically not a cut, flat reimbursement rates against rising costs amounts to a de facto cut, Hurlbut maintains. A slight increase last year fell far short of addressing actual needs.

Then, in the current state budget adopted in April, New York reduced nursing homes’ Medicaid reimbursements, eliminating a case-mix adjustment that had paid nursing homes higher rates for providing higher levels of care.

In July, the New York State Health Facilities Association Inc., which represents 400 of the state’s skilled nursing facilities, sued the state, seeking to reinstate case-mix payments. Two hundred of the Albany-based trade group’s members individually signed on to the suit.

Action on the lawsuit is on hold until October.

In the meantime, Hurlbut says, faced with lower reimbursements for high-cost care, his nursing homes and many others are quietly turning away more complex cases, a development that Hurlbut says adds measurably to hospitals’ ALC ills.  

Hospital and nursing home officials say a consequence of the increasing pressures on hospitals and nursing homes in this region and statewide is that most skilled nursing admissions now go through hospitals.

While in the past families looking to place a relative in a nursing home typically would have been able to choose a facility close to home, that could no longer be an option for a significant number.

Multilevel skilled nursing facilities like St, John’s Home, St. Ann’s Community, the Jewish Home and nursing homes run by the RRH and UR systems also have assisted-living senior care and give preference to assisted-living residents who move up to skilled nursing facilities, eliminating such dilemmas for some. But assisted living is expensive and mostly private pay, and thus not an avenue open to all.

URMC and RRH both have organizations whose job it is to place discharged skilled nursing patients. In some cases, says URMC’s Luther, the only available slots are be in distant counties. “People have been sent across the state,” she says.

URMC and RRH officials praise the region’s Assembly and Senate representatives for working diligently to understand and seek to address nursing homes’ Medicaid shortfalls. How much relief they might be able to arrange or how soon it might come is not clear.

Democrat Jen Lunsford represents the 135th Assembly District, which includes the towns of Pittsford, Perinton, Penfield, East Rochester and Mendon. Working with Runyon, Parrinello and other area hospital and nursing home officials, she has closely tracked the ALC crisis.

“It’s a major issue,” she says. The state’s inadequate Medicaid payments “are forcing nursing homes to make a difficult choice: to provide care or protect their bottom lines.”

The state’s last budget did include a 6.5 percent increase in nursing home Medicaid rates, Lunsford says, but it was largely offset if not overwhelmed by cost increases, leaving skilled nursing facilities no better off than they were before.

What are the chances of seeing increased Medicaid payments for New York nursing homes?

“I’m optimistic,” Lunsford says, pinning her hopes on a $3.1 billion Medicaid waiver the state has won from the federal government.

The state asked for the federal funding influx specifically “to address health disparities exacerbated by the COVID-19 pandemic.”

Still, notes Lunsford, the $3.1 billion “is not just for nursing homes.” The money will have to be spread across the state’s $36 billion Medicaid program. How much financial relief nursing homes will get remains to be seen. She thinks it is unlikely the gap between actual costs and Medicaid payments will be fully addressed.

Creative solutions

In the meantime, URMC and RRH are taking steps to steps to alleviate ALC bottlenecks and are achieving some success.

Colleen Rose, RRH senior vice president of extended care, points to Elder 1, an RRH program that arranges for home-based skilled nursing care. By moving skilled nursing patients out of hospitals without putting them in nursing homes, such placements take some pressure off hospitals and nursing homes. Elder 1 operates under a federal program that provides reimbursement for aide and skilled nursing visits and social benefits like adult day care.

Currently, Elder 1 serves some 700 individuals in Monroe, Wayne and Ontario counties.

While RRH’s Rose expresses tremendous pride in the work that the system’s doctors, nurses and planners do to place skilled nursing patients in home settings, eligibility standards set by the federal government “definitely limit the number of people who go in it.”

For its part, URMC in January 2022 created in-hospital virtual nursing home units at Strong and Highland. In addition, it recently concluded a deal with St. John’s Home that Runyon and Parrinello expect to take some of the pressure off both. Under the agreement, Strong will set up and staff a dialysis unit on one of the currently vacant floors at St. John’s and staff additional people at the facility for a pediatric skilled nursing unit.

For St. John’s Home, adds Runyon, the dialysis unit will also mean that the nursing home will no longer have to transport dialysis patients to an offsite third-party provider.

Still, RRH’s Rose, Runyon and Parrinello concede, the measures they can take to ease the ALC crunch will remove some pressure but will not solve the underlying problems: too few hospital and nursing home beds and not enough Medicaid funding.

And if those issues are not somehow addressed, Hurlbut glumly predicts, New York’s hospitals will step by step “turn into big fat nursing homes.”

Will Astor is Rochester Beacon senior writer. Jacob Schermerhorn, Beacon contributing writer and data journalist, created the data visualization for this article. The Beacon welcomes comments and letters from readers who adhere to our comment policy including use of their full, real name. Submissions to the Letters page should be sent to [email protected].