February 10, 2021, Alex Spanko, Skilled Nursing News - The COVID-19 pandemic brought the twin financial strains of elevated expenses and sharply reduced sources of revenue for the nation’s nursing homes as they became an epicenter of sickness and death, and a major industry trade group this week painted a dire operational picture for the year ahead.
Nursing facilities will lose a total of $22.6 billion in revenue during 2021, according to a new projection from the American Health Care Association, as occupancy — the primary driver of income for facilities — remains at record lows.
On top of an $11.3 billion decline already seen in 2020, that would brings the COVID-19 financial toll to $34 billion, or a decline of 24%, even as expenses related to staffing, personal protective equipment (PPE), and routine testing sit at an estimated $30 billion per year for 2020 and 2021.
The lobbying and trade group presented the numbers in a call for more federal support on top of the billions already distributed through various stimulus programs; nursing homes received about $13 billion in total from the Provider Relief Fund, as well as an additional $8 billion in support such as Paycheck Protection Program (PPP) loans and free testing equipment.
“This was a major lifeline and helped prevent numerous providers stem the tide last year, but as the pandemic persists, more is needed in 2021,” the organization asserted.
AHCA has specifically called for $20 billion more aid, either through a refill of the Provider Relief Fund or another boost to the Federal Medical Assistance Percentage (FMAP), Washington’s share of Medicaid funding.
Without it, the group warned, the trend of COVID-related nursing home closures and mergers that started last year will continue: 2020 saw 143 facilities shut their doors or combine with others, AHCA noted, with 1,670 projected in 2021.
“Most residents are older adults living with multiple underlying health conditions, and they require a high-level of specialized care,” the group noted. “Closures leave residents displaced from their long-standing communities and loved ones as well as reduce their options for quality care, especially in rural areas.”
Officials across the country may not always see reduced nursing home capacity as a negative trend, however: Lawmakers in Ohio are currently considering a plan that would give nursing home operators a total of $50 million to take beds out of service, a move that advocates say would boost reimbursements for the buildings that remain and help better serve the growing demand for in-home services.
Even before the pandemic, states have made moves to bolster coverage of non-institutional nursing care services, and the stories of outbreaks and isolation in facilities has only accelerated the shift to home for post-acute patients. A major outstanding question for the nursing home industry will be whether that shift solidifies even after the vaccine rollout ostensibly allows a return to normalcy for visits and social activities in institutional care settings.
Major home health companies have made bets on beefed-up SNF-at-home services to capture an even greater share of the post-acute population, though at least one major landlord with significant nursing facility holdings expressed skepticism around bed buy-backs becoming a major trend.
“This is nothing new,” Omega Healthcare Investors (NYSE: OHI) CEO Taylor Pickett said Monday. “The trend of moving towards home health as much as possible has been going on for years, and so to the extent the pandemic perhaps accelerated some marginal patients, I don’t think that’s problematic, because it’s a trend that we’ve seen.”