Sector faces shortage of workers, increase wages and stagnant Medicaid reimbursement. ‘Across New York state in 2022, all nursing facilities collectively lost more than $756 million,’ says a nursing home operator
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 in Oswego, which manages living facilities, residential care centers, and rehabilitation and nursing centers in in several Upstate locations. 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.
“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 $2.1 million per facility in 2022.
“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 Medicaid 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.
Christopher Koenig, MBA, licensed nursing home administrator and president and CEO of Niagara Lutheran Health System, said that said that receiving sufficient funding would help long-term care facilities pay better wages and attract more workers.
“Every year, we get new regulations and new mandates for staffing and wage increases, but the state hasn’t followed through for funding increases and we don’t have the ability to fund wages,” Koenig said.
Providing employees with quality-of-life perks such as childcare has helped attract workers. Niagara Lutheran is also looking at a means of providing transportation for workers, as a lack of public transportation presents a barrier to some.
To help fund adequate levels of care, Koenig said that his organization has become more creative in combining administrative roles to help increase efficiency.
In addition, “we’re working on retention ideas that aren’t just about wages, although we’re one of the top payers around,” he said. “We’re working at a deficit. The expenses continue to rise and that’s not something we can impart onto our residents.”
Koenig fears for the entire long-term care industry. Offering other services such as rehabilitation, respite care and continuing care helps long-term care organizations scrape by. But the widespread budgetary shortfalls and employee shortages make it hard to staff these additional revenue streams.
“If there’s nothing done to save the system, there’s a chance a lot of nursing homes will go out of business,” he said. “The reform has to come from a societal transition. People are living longer, but because of that, they have more health concerns that require higher level care. It will take decades to transform that.”