Nursing home industry struggles amid pandemic

Even before they became deadly petri dishes for the worst pandemic in genera- tions, many nursing homes were struggling to stay afloat and provide quality care.

But since the start of the coronavirus outbreak, nursing home operators have had to spend more money on protective equipment for staff and technology to connect residents with relatives who are no longer allowed to visit. Their revenues have shrunk because they are admitting fewer new residents in hopes of reducing the risk of infection.

The result is that some nursing homes, which often run on razor-thin profit margins, may be unable to pay their rent and other bills without government help.

“It could be a huge economic mess,” said Charlene Harrington, a professor emerita of nursing at the University of California, San Francisco. “It is possible that many nursing home chains could go bankrupt with the virus.”

Presbyterian Homes and Services, a Minnesota-based nonprofit operator of 16 nursing homes, estimates that the average 72-bed nursing home is spending an additional $2,265 a day on personal protective gear and an additional $1,500 a day on extra nursing staff.

At Meadow Ridge, a retirement community in Redding, Conn., with 62 nursing-home beds, executives have been forced to use Amazon or outside vendors to buy protective gear, said Kimberly Held, the community’s director of nursing.

“The pricing is unbelievable,” Held said. “I did have to order ponchos as a backup plan if we ran out of gowns. When we received our N95s, it felt like Christmas,” she added, referring to a type of mask that has been in short supply.

Nursing homes care for about 1.5 million people in the United States, and 70% of the 15,400 facilities are run for profit. While the financial picture for the industry, which also includes homes run by government agencies and nonprofits, was hardly rosy before the virus struck, it was especially precarious for many for-profit nursing homes.

Reimbursements from government programs like Medicaid are a main source of revenue for nursing homes, but operators have long complained those payments have not kept pace with the cost of care.

The industry is increasingly relying on the government for another form of support: The Department of Housing and Urban Development guarantees $20 billion in mortgages to more than 2,300 nursing homes — about 15% of the country’s total, up from about 5% a quarter-century ago. (Last year, the $146 million collapse of Rosewood Care Centers was the biggest default in the history of the mortgage-guarantee program.)

It can by pricey just to keep the doors open.

For-profit nursing homes often rent their properties under long-term leases from real estate investment trusts, investment firms or private equity shops. A review of regulatory filings found that six major health care real estate investment trusts — Sabra, Welltower, National Health Investors, Omega Healthcare Investors, LTC and CareTrust — had a business interest in more than 1,500 nursing homes.

Advocates for the elderly say care inevitably suffers when nursing homes face financial trouble. More than a half-million nursing home residents lived in facilities rated below average or much below average in the federal government’s five-star rating system.

The lowest-rated homes were disproportionately operated for profit. Nearly half the residents of for-profit nursing homes lived in ones where the federal government found below-average staffing levels, compared with 23% of the residents of government or nonprofit facilities, according to a New York Times analysis of government data.

The Times has identified more than 4,000 nursing homes and other long-term care or elder facilities across the United States with coronavirus cases, based on reports by states and counties. More than 36,500 residents and staff members at those facilities have contracted the virus, and more than 7,000 have died. The Times, however, has been able to identify at least 1,700 nursing homes on that list of facilities which have reported 4,000 deaths.

In hopes of avoiding devastating outbreaks, nursing home operators have had to admit fewer residents. The pandemic has rippled in other ways, too: Many hospitals are postponing elective procedures that usually require short rehabilitation stints, taking away another source of clients.

“A very large fraction of their most profitable business is post-surgical rehabilitation,” said Howard Gleckman, a senior fellow at the Urban Institute. “And most of that business is gone.”