Nursing home sector facing financial hardships from COVID-19 costs

A recent survey by American Health Care Association and the National Center for Assisted Living of 953 nursing home providers across the country found 66% said they won’t make it another year given the impact of higher COVID-19 costs.

This alarming cry for help prompted the sector to urge Congress to pass another relief package to replenish the Department of Health and Human Services Provider Relief Fund, which has nearly run out of money and resources to help hospitals and nursing homes respond to the record number of COVID-19 cases.

“Our nursing home providers are facing the worst financial crisis in the history of the industry due to increased costs related to COVID (testing, personal protective equipment, staffing) and chronic Medicaid underfunding. Without adequate resources, the U.S. will repeat the same mistakes made during the initial outbreak last spring. We need Congress to prioritize our vulnerable seniors and their caregivers in long term care facilities, by passing another COVID relief package right away,” said Mark Parkinson, president and CEO of American Health Care Association.

The survey found 90% of nursing homes are operating at a profit margin of 3% or less, and 65% said they are operating at a loss. Staffing is the top cost in response to the pandemic with nine out of 10 nursing homes hiring additional help and or having to pay overtime.

The survey found 43% of respondents said additional staffing costs were their highest expense related to COVID-19. When asked how the facilities have addressed workforce challenges in the pandemic, 68% said they had hired more people, 94% said they asked employees to work overtime or double shifts, and 86% said they provided hero pay to staff members. This was true even of those facilities that have not yet reported any positive cases. Personal protective equipment (PPE) was the highest cost for 26% of the respondents while testing costs were the top costs for 12% of the respondents.

In September, a federal stimulus of roughly $333 million was distributed to over 10,000 nursing homes across the U.S. to help them control infections. The funding was deemed performance pay to help yield positive results in improving quality and control of infection in nursing homes.

“We’ve provided nursing homes with resources and training to improve infection control, and we’re rapidly providing incentives to those facilities that are making progress in the fight against COVID-19,” U.S. Department of Health and Human Services Secretary Alex Azar said in October.

This came after $5 billion HHS gave to the sector’s Provider Relief Fund in May. Another $5 billion was given in August of which $2.5 billion went to nursing homes to help control COVID-related costs, with $2 billion set aside for five rounds of incentive payments for nursing homes that maintain high standards from infection control and reduce mortality. The first round of the incentive payments – $333 million – was distributed in September and 118 facilities in Arkansas received a combined $6.554 million.