Survey: Majority of nursing homes won't make it next year if COVID-19 operating losses continue

Caregiver end of life care nursing home palliative care
Higher staffing costs from COVID-19 have placed a majority of nursing homes in a financially precarious situation, a new survey found. (Getty/KatarzynaBialasiewicz)

Two-thirds of nursing homes say in a recent survey they won’t be around next year if they have to continue to face higher costs and operating losses due to COVID-19.

The survey released Wednesday by the American Health Care Association and National Center for Assisted Living looked at the financial and staffing challenges facing nursing homes, which have been slammed by the pandemic.

“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,” said Mark Parkinson, president, and CEO of the association, in a statement.

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The survey of 953 nursing homes found that 66% won’t make it another year at the current operating pace. Right now, 65% are operating at a loss or negative margin and 25% are operating at a margin of zero to 3%.

The biggest drain on nursing home finances has been staffing. Nine out of 10 of the nursing homes surveyed had to get additional staff or pay overtime.

Another 58% said that additional staff costs were their top cost incurred due to COVID-19 and another 70% had to hire additional staff.

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The survey found that 86% of nursing homes had to provide bonuses to staff members and 68% hired additional staff.

Nearly all nursing homes (94%) asked their staff to work overtime or double shifts.

At the start of the pandemic, the entire healthcare sector shed 1.5 million jobs, according to a study in the Journal of the American Medical Association. But while hiring in other sectors like hospitals and physician offices has rebounded, long-term care facilities like nursing homes have not recovered.

The long-term care industry has lost 246,000 jobs from March to November, according to data from the Bureau of Labor Statistics.

Other financial challenges associated with COVID-19 include testing, where 12% of nursing homes said was their top COVId-19 cost, and personal protective equipment with 26% as their top cost.

Parkinson said that Congress needs to provide another round of relief funding to nursing homes to help them.

Congress included a $175 billion provider relief fund when it passed the CARES Act back in March, but so far talks for another relief package remain stalled on Capitol Hill.

The Department of Health and Human Services (HHS) also doled out $333 million in incentive payments to nursing homes that met certain quality standards.