May 22, 2020

Un-sung Nursing Home Heroes

By Matt Bavolack, Principal, National Healthcare Industry Group Leader

Un-sung Nursing Home Heroes

Every day a new group of individuals, we now call heroes, awaken to take their shift on the front lines of caring for residents in their respective nursing homes.

Owners and operators are present and on the scene to support their teams who are caring for our frail and elderly population. The COVID-19 pandemic has not been kind to the world and the world’s economies. Even more so, it has deeply impacted the lives of the frontline workers and the residents whom they serve. Just in listening to the multitude of cases over the past couple of months, we understand how devastating COVID-19 has been to nursing homes. For example, in the beginning of May in Connecticut, 57 of the state’s 213 nursing home reported at least one case of COVID-19, and as of this writing, that number has more than doubled, to 127. According to CMS Data as of April 23, 2020, more than 10,000 people in long-term care facilities have contracted the virus. All devastating numbers, affecting so many families the heroes who are for them during this time of isolation.

When researching “COVID-19 Survival Rates in Nursing Homes,” it was almost impossible to find a positive article, discussion or statistic. It’s amazing to see how quickly the negative news flows and how there is virtually no reporting on the positive. Here are some positive headlines that should be highlighted in the midst of all the negativity:

  • Connecticut and the Northeast seems to be on the back side of the curve.
  • The death rate are declining steadily.
  • Nursing home operators have become the leaders in advising how to control the spread of the virus through:
    • Opening previously closed nursing homes as COVID-19-only facilities.
    • Recognizing staff members as heroes.
    • Working tirelessly side-by-side with their employees to ensure the continued safe delivery of care to our nation’s frail and elderly.

It’s no secret that COVID-19 will have a long-lasting effect on the nursing home industry. While many states have increased Medicaid funding for facilities, this is only temporary. Additionally, in many instances the increased state funding net of the significant census reductions across the industry may, in fact, actually represent a savings to states. Let’s lay out some economic facts about the industry:

Pre-COVID-19 (per the 2018 CMS Database of as filed Medicare cost report)

  • National average cash on hand for 2018 was at its lowest level over the last five years, with approximately 22 days of cash on hand.
Region 2018 Days Cash on Hand
Midwest 22
Northeast 38
Pacific 13
Rocky Mountains 23
Southeast 18
Southwest 10
  • In 2018, the national net income per patient day (PPD) declined from $8 to $.50. While nursing home operators were never rolling in money, they’re now just about treading water.

So how is COVID -19 impacting nursing homes?

  • Occupancy rates in nursing homes have declined since the onset of COVID-19.
  • Average cost of COVID readiness and related expenses is approximately $120-$150 PPD.
  • Providers are forced to pay double if not triple wage rates to employees just to show up.

While nursing home operators are receiving funds from Health and Human Services (HHS), some are receiving minor rate increases from state regulators. But the sum received will not cover expenses incurred and the loss of revenue due to declining census. The industry is not making money on COVID-19; in fact, margins will most likely continue to decline. But one thing is certain: The industry will rally to continue to meet the care needs of the frail and elderly population. Providers will continue to care passionately for their residents and provide the best treatment and emotional support possible in a time of isolation.

On behalf of myself, the entire Marcum Healthcare Group and so many others, we thank all of the unsung heroes in our nation’s nursing homes and senior living facilities.

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