CLA Analysis Of The Skilled Nursing Industry Shows Ongoing Economic Crisis Threatening Seniors’ Access to Care

The American Health Care Association and National Center for Assisted Living (AHCA/NCAL) released a new analysis produced by CLA (CliftonAllenLarson LLP) on the state of the skilled nursing facility (SNF) industry. The report confirms that increasing costs due to labor shortages and inflation, combined with a sluggish recovery of new incoming patients, are adding to the financial strain on our nation’s long term care providers. This comes after two years of dedicating extensive resources to protect seniors and staff from COVID-19 along with decades of chronic Medicaid underfunding. When nursing homes struggle to stay afloat, seniors’ access to care is threatened.

Key findings from the CLA report include:

Wage rate increases for nurses at all levels have doubled from 2020 to 2021, and rates for contracted and agency nurses are on average two to three times higher than they were prior to the pandemic.

Negative operating margins are projected for the average nursing home in 2022, even under the best-case scenario. The median operating margin is expected to be negative 4.8 percent with a median occupancy of 77.3 percent.

Risk of facility closures is growing, with 32 to 40 percent of residents currently living in facilities that are projected to be financially “at risk.” That’s more than 400,000 residents at risk of displacement if Medicaid and Medicare funding to nursing homes is cut this year.

AHCA/NCAL held a virtual press conference to highlight the findings from the report featuring insights and analysis from Mark Parkinson, president and CEO of AHCA/NCAL, Deb Emerson, a principal of CLA, and Nate Schema, president and CEO of Good Samaritan Society. During the press conference, the experts talked to the importance of policymakers having a fully comprehensive view of the sector when determining issues relating to funding and resources. Nate Schema said:

“It is critical that policymakers consider the whole picture and look at the totality of the impact that the pandemic has had over two years so that we may carve a new path forward. We owe it to our nation’s seniors, their families and our frontline caregivers who have heroically served these past couple of years.”

The findings from the report and the subsequent press conference have been covered by several national, trade and local outlets over the past few weeks, including Associated Press, Bloomberg Law, McKnight’s Long-Term Care News, McKnight’s Senior Living, Skilled Nursing News, Modern Healthcare, The Highland County Press, Dakota News Now, Kenosha News and Phoenix Magazine.

AHCA/NCAL also recently sent a letter to Xavier Becerra, Secretary of the U.S. Department of Health and Human Services (HHS), to request meetings with the White House, HHS and the Centers for Medicare and Medicaid Services (CMS) to discuss ways the Administration and the nursing home profession can work collaboratively to address major challenges and make ongoing improvements. Last year, AHCA and LeadingAge released a comprehensive proposal for reform in the Care For Our Seniors Act as a guide for how policymakers can help transform and invest in America’s nursing homes.

Without support from federal and state lawmakers as well as the public health sector, more nursing homes will close and meaningful reform of the industry will not be possible. The Biden administration must consider a holistic view of the long term care industry when issuing reimbursement and regulatory policy—not make decisions in silos. We must come together to implement the solutions needed to help facilities continue providing high quality care for America’s seniors.