Nursing home operator gets $300 million of federal aid

The nation’s biggest nursing home operator, Genesis HealthCare, has received more than $300 million in government grants and loans to help it grapple with the coronavirus pandemic that has killed about 1,500 of its residents.

Genesis said on Wednesday that it had received a $180 million grant under the

CARES Act, plus

$27 million in state funding and

$158 million in advance Medicare payments — effectively a short-term loan from the federal government.

But its main life preserver was the relief bill, which set aside up to $100 billion for cash-starved hospitals, nursing homes and other medical providers dealing with the pandemic.

“We see the

CARES Act federal funding as the true backstop here,” said Tom DiVittorio, the company’s chief financial officer.

Genesis operates nursing homes in 26 states and is one of the few publicly traded companies in the industry. Its size makes it something of a bellwether, and its financial filings provide a detailed look at the added stress being put on all nursing homes. Revenues have been hurt by reduced occupancy, and costs have soared from adding staff, buying personal protective equipment and purchasing virus testing kits to protect residents and workers.

In April, the company’s operating expenses rose an additional $21 million solely owing to the pandemic. And the

“As we move into June, the nursing home sector has not rebounded in a major way. A key question is how long federal support can and will continue. It is very unclear when the nursing home sector will return to business as usual.” DAVID GRABOWSKI, A PROFESSOR OF HEALTH CARE POLICY AT HARVARD MEDICAL SCHOOL

company said during a conference call to discuss its first-quarter earnings that it expected a similar additional increase over what it would normally spend in May.

Occupancy levels have plummeted since the virus began to spread this spring: At the end of March, the company said, roughly 88% of its 42,000 beds were full. It expects that figure to fall to 76% by the end of this month.

The difficulties at Genesis offer a glimpse of how the COVID-19 crisis has ravaged long-term care facilities. The nation’s 15,400 nursing homes have become ground zero for the crisis, with well over a third of the more than 100,000 deaths in the United States involving either residents or employees of elder care facilities.

Thanks in part to the sales of some properties, Genesis reported a $33.5 million profit in the first quarter, a year after reporting a loss in the same period. But the coronavirus crisis did not really hit the United States until late March, and the bulk of the money handed out under the CARES Act did not go out until after April 1.

“The second quarter of 2020 might be a much better indicator of the true financial health of Genesis under COVID,” said David Grabowski, a professor of health care policy at Harvard Medical School, who has written frequently on the nursing home industry. “As we move into June, the nursing home sector has not rebounded in a major way. A key question is how long federal support can and will continue. It is very unclear when the nursing home sector will return to business as usual.”

Even with the federal government’s financial relief to the nursing home industry, there has been concern about how some operators will weather the pandemic, because many face tight margins and have costly lease agreements.