July 24, 2020, Ben Swett, SeniorCare Investor - This pandemic is lasting longer than some people hoped for, and the longer it does, the greater likelihood of more change. I remember in April talking to a few industry professionals (you know who you are) who thought this “coronavirus thing” would be mostly history by July.
So did President Trump. The problem is, hope is never a good business plan. I took the unpopular opinion back then that it was going to be a long, tough slog for the industry. I wish I had been wrong.
Because of the pandemic, there have been all sorts of news stories about what is going to happen to the nursing home business. No one can predict the future, not even me. The reality is, however, that the number of beds will probably continue to decrease while demand may increase, depending on what happens to attitudes and funding. It is all about the funding.
One article was called “The American Nursing Home is a Design Failure.” Perhaps, but back in the day, they were designed for efficiency and to minimize costs. The author sang the praises of the Green House Project homes, you know, the clusters of homey buildings with 10 to 12 private rooms, their own kitchen and dining area, helping to cook, singing kumbaya.
The problem is that when I see pictures or videos of these communities, nice as they are, for the most part the residents look like they should be in assisted living, not skilled nursing. Green House homes might be better for the resident, but they are neither cheap nor efficient.
Change will not come to skilled nursing until how we pay for it changes, and not until Medicaid tightens up on eligibility and a greater percentage of the elderly, and soon-to-be elderly, take more responsibility for the cost of their own care. The federal funding well is drying up, and this pandemic is certainly not going to make it better. Change will come, but we may not like it.