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Coronavirus 'has been a clinical disaster' and 'a business nightmare' for nursing homes

Adriana Belmonte
·Senior Editor
·5 min read

Nursing homes across the U.S. are in dire straits as a result of the coronavirus pandemic.

Many long-term care facilities became hot spots for virus outbreaks early and often. More than 410,000 residents and 350,000 staff members have tested positive for COVID-19, while 81,790 residents and 1,216 staff members have died from the disease caused by coronavirus. As a result, many families have transferred their loved ones out of these facilities in order to keep them safe.

“This has been a clinical disaster,” AHCA/NCAL CEO Mark Parkinson said on Yahoo Finance Live (video above). “The numbers are just staggering and heartbreaking about what has happened with older people and facilities in the general population. It's been horrible. It's also been a business nightmare.”

Governor Ned Lamont greets Jeanne Peters, 95, a rehab patient at The Reservoir, a nursing facility, after she was given the first coronavirus disease (COVID-19) vaccination at the nursing home, in West Hartford, Connecticut, U.S., December 18, 2020. Stephen Dunn/Pool via REUTERS
Governor Ned Lamont greets Jeanne Peters, 95, a rehab patient at The Reservoir, a nursing facility, after she was given the first coronavirus disease (COVID-19) vaccination at the nursing home, in West Hartford, Connecticut, U.S., December 18, 2020. Stephen Dunn/Pool via REUTERS

The nursing home industry is being devastated: A new survey from the American Health Care Association and National Center for Assisted Living (AHCA/NCAL) found that two-thirds of nursing homes don’t think they’ll make it another year as a result of increased COVID costs.

Nursing home occupancy in the U.S. is down by 15% since the end of 2019, according to the Wall Street Journal. Parkinson described these numbers as “catastrophic.” The survey also found that 90% of nursing homes are operating at a loss or less than 3% profit margin.

Nursing homes are concerned they won't make it through the year. (Chart: AHCA/NCAL)
Nursing homes are concerned they won't make it through the year. (Chart: AHCA/NCAL)

Nursing home industry can ‘only last as long as the federal aid lasts’

The pandemic exacerbated existing issues for the sector: The nursing home industry has been facing a financial shortfall since at least 2013, particularly for non-Medicare margins, according to the AHCA.

Non-Medicare margins, which refer to “revenues and costs associated with Medicaid and private payers for all lines of business,” declined 3% in 2018, an increase from the year prior.

During the pandemic, the industry has been reliant on the federal aid allocated through the CARES Act, but Parkinson noted the sector can “only last as long as the federal aid lasts.”

KIRKLAND, WA - AUGUST 24: Sarah Tongson (R), Director of Social Services, gives Douglas Smith some hand santizer during a visit with his wife Deborah Trigueiro at the Life Care Center of Kirkland on August 24, 2020 in Kirkland, Washington. This is only the second time Smith and his wife have seen each other in person since February when the coronavirus (COVID-19) raced through the facility. Prior to their first visit last week they had to talk through the window on a phone. Recently, Washington state Governor Jay Inslee issued a directive to allow visitors to long-term care facilities. The families cannot touch, must visit outside and stay socially distant. The Life Care Center of Kirkland, a nursing home, was an early epicenter for coronavirus outbreaks in the U.S. According to a report by the CDC, at least 37 coronavirus deaths have been linked to this facility. Prior to (Photo by Karen Ducey/Getty Images)
Sarah Tongson, Director of Social Services, gives Douglas Smith some hand sanitizer during a visit with his wife Deborah Trigueiro at the Life Care Center of Kirkland on August 24, 2020 in Kirkland, Washington. (Photo by Karen Ducey/Getty Images)

Congress passed a new stimulus bill this week, the first major relief legislation since March, but President Trump demanded the stimulus checks be higher before signing off. The nursing home industry would receive $3 billion in provider relief fund if the legislation becomes law.

Parkinson said he was “a little disappointed” at the amount, but “we’re hopeful that when Congress comes back in 2021, more will be added.”

“60% of buildings are operating at a loss right now,” he said. “So if there were no federal aid at all, we'd be looking at much greater than 10% to 20% of the sector closing their doors. With federal aid, there will be closures. We would anticipate several hundred to 500 buildings or so closing in 2021, but the sector for the most part will be able to hold intact, but again, it's all about continued federal aid and then recovery of census post-vaccine.”

The rollout of COVID-19 vaccines will be crucial to the industry’s bottom line, as that is what plays a major role in getting the census (overall population) to come back. And while census numbers are one of Parkinson’s main concerns, staffing has proven to be a cost issue as well.

The AHCA/NCAL survey found that 90% of nursing homes have had to hire additional staff and/or pay them overtime, and 58% of nursing homes said this was their top cost incurred due to the pandemic.

Hiring staff has driven up costs. (Chart: AHCA/NCAL)
Hiring staff has driven up costs. (Chart: AHCA/NCAL)

“If we can get the federal aid through the first half of 2021, get all of the folks vaccinated by our goal [of] March 1 of 2021 for them to have their second vaccine, then we believe that census can rebuild,” he added. “It’s not going to snap back overnight. We think it’s about half a percent or a percent a month. So we’re looking at 12 to 18 to 24 months, but we think the sector can make it through that as long as the federal aid continues through the first half of 2021.”

‘They just need more help in order to be able to continue’

Beyond additional federal aid, vaccine distribution is another other major factor for the industry.

Aid will help the nursing homes hold on longer while vaccines for both residents and staff would stem the tide of infection and death plaguing long-term care facilities.

“The vaccine obviously works quite well,” Parkinson said. “The side effects have been pretty limited and we are hoping that once everyone is vaccinated in these buildings, which will be about 60 days from now, people will once again recognize them as safe places for their parents and grandparents and we can start building our businesses back.”

Garry Damper, 67, a patient at The New Jewish Home, a nursing home facility, receives the coronavirus disease (COVID-19) vaccine from Walgreens Pharmacist Jessica Sahni in the Manhattan borough of New York City, New York, U.S., December 21, 2020. REUTERS/Yuki Iwamura     TPX IMAGES OF THE DAY
Garry Damper, 67, a patient at The New Jewish Home, a nursing home facility, receives the coronavirus vaccine from Walgreens Pharmacist Jessica Sahni in New York City, December 21, 2020. REUTERS/Yuki Iwamura

In the meantime, he said, nursing homes have been able to learn from their mistakes and adjust their infection protocols, as they now know that viruses can be spread just as easily by those who are asymptomatic.

“As we sit here today, assisted living facilities and nursing homes are continuing to fight,” Parkinson said. “They’re doing everything they can to keep COVID out of their buildings, and they just need more help in order to be able to continue.”

Adriana is a reporter and editor covering politics and health care policy for Yahoo Finance. Follow her on Twitter @adrianambells.

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